The UK pet market is one of the largest in Europe. According to veterinary charity People's Dispensary for Sick Animals (PDSA), around half of UK adults own a pet with millennials making up a large percentage of all dog owners. The report shows 24 percent of UK adults have a cat, equal to an estimated population of 10.9 million. While 26 percent have a dog, resulting in an estimated population of 9.9 million.
The pet market has grown steadily in recent years and is predicted to be worth around £5.5 billion this year compared to £5.1 billion in 2015, according to a Mintel report. But how can digital adoption transform the industry and make it fit for future purpose?
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A nation of pet lovers
It is clear that the UK is a nation of pet lovers. Research from Opinium shows dog and cat owners across the country are spending approximately £11.6 billion annually on gifts, special diets and activities for their pets. According to the study, the single biggest spend is on trips to the vet, which totals around £150 per year. A recent Mintel report has also revealed 51 percent of British owners are more likely to cut back on personal spending than see their pet go without. Recent figures published by the Office for National Statistics revealed that expenditure on pets and related products reached an annual value of £6.9 million last year, which has doubled since 2009.
A pet insurance opportunity
As the number of people purchasing pets continues to rapidly increase across the UK, there are huge growth opportunities for pet insurance providers. The UK pet insurance market was highly penetrated last year: research from Global Data’s UK Insurance Consumer Survey indicated two thirds of dog owners had insurance for their animals. Despite this, data on insurance claims in the UK shows that, over the last 10 years, the average claim amount has increased by 75 percent, but the average premium has only risen by 50 percent. This suggests that although consumers are getting better value for money in relative terms, pet insurance is actually becoming less profitable for insurers. Insurance providers are faced with choosing between either cutting the margins on policies or becoming increasingly uncompetitive.
Digital transformation provides a solution to this for insurers. By digitizing processes, insurers can benefit from a huge increase in efficiency. Examples include more effective payment collections; faster and more accurate claims management and settlement; improved data security; reliable policy creation; effective product marketing and risk reduction – all of which can be digitally delivered. By utilizing technology for tasks previously carried out by people, insurance providers will be able to save a significant amount of money and focus their staff on more interesting and engaging tasks. Implementing technology that can carry out jobs such as claims processing also results in a higher degree of accuracy. Research from Accenture shows insurance executives expect the industry to be completely transformed by technology. Insurers are embracing this digital transformation more than ever before by adopting new technologies into their long-term planning.
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Better for customers
Insurers will be able to provide customers with speedier responses, resulting in better overall customer service satisfaction. Customers no longer need to spend as long on a call or searching for insurance paperwork as everything can be accessed online. With the majority of people in the UK now having access to a smartphone, being able to update claims or policies themselves either online or through an app will be an attractive solution. Using digital technology to streamline and automate customer service processes has the dual benefit of reducing operational costs and also improving both the company’s reputation with its customers and its profitability.
The power of data insight
Digitizing the insurance process enables insurance providers to have access to vast quantities of data. This data can help identify pet breeds that are susceptible to a certain illness or injury. For example, are French Bulldogs more prone to breathing difficulties? This means insurance companies can give owners more of a choice when it comes to preventative medicine, use earlier intervention methods and encourage healthy lifestyle habits from an early age. This will enable pet owners to save money in the long-term and avoid the risk of traumatic surgery for pets later in life.
Data is also an incredibly important asset for insurance providers as it can identify trends that have the potential to help them offer more accurate and competitive premiums. Data can enable insurers to manage risks more effectively and target relevant audiences with specific insurance products. Insurers can even use data from one policy to shape the consumer offering in another, which can provide a more bespoke and personalized insurance proposition.
The right platform for data insight
The right insurance platform will deal with every aspect of a pet insurance proposition.
Digital adoption can completely transform how insurance providers operate. To date, the insurance industry has been impacted but not disrupted by technology, but this is rapidly changing. Within the next five years, we expect to see a shift in the way the industry behaves, based on insight from data and smarter use of digital technology. This will deliver a more personalized insurance experience to consumers, driving customer loyalty and offering a vastly more efficient service to the public. Smarter deployment of digital technology can help insurers provide a more up-to-date and effective service at a reduced cost.
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Mark Colonnese, Aquarium (opens in new tab)