TABLE OF CONTENTS
Overview 1
Catalyst 1
Summary 1
Executive Summary 2
The pet market grew substantially in 2007 due to higher premium rates and volume 2
Pet insurance has become a product for the relatively well off, although price is a concern 4
The market remains heavily consolidated, with only a limited number of underwriters 5
The market is forecast to reach £697.8 million in 2012 as product penetration increases 5
Market Context 11
Introduction 11
The pet market grew substantially in 2007 due to higher premium rates and volume 11
The pet population has stalled due to shifts in social-economic conditions 16
The pet insurance market is principally concerned with dogs and cats 20
High claims inflation has constrained profits, although insurers are trying to compensate 23
Customer focus 26
Introduction 26
Pet insurance has become a product for the relatively well off, although price is a concern 26
Direct insurers dominate pet insurance distribution with many consumers choosing to purchase their policies by phone or online 30
More expensive direct mail and press advertising drove up pet insurance marketing costs 33
Competitive Dynamics 37
Introduction 37
The market continues to experience a high turnover, although entrants outnumber leavers 37
The market remains heavily consolidated, with only a limited number of underwriters 38
Future Decoded 43
Introduction 43
Pet ownership trends are forecast to remain steady over the next five years 43
Scenario one: market is forecast to reach £697.8 million in 2012 as product penetration increases 44
Scenario two: high premium rate inflation and lower product penetration lead to lower growth 47
APPENDIX 51
Supplementary data 51
Definitions 54
Methodology 55
Competitor data 57
Further reading 57
Ask the analyst 58
Datamonitor consulting 58
Disclaimer 58


TABLE OF FIGURES
Figure 1: UK pet insurance penetration rate, 2003-07 3
Figure 2: Both cat and dog premium income drove the growth in the market size 12
Figure 3: UK pet insurance penetration rate, 2003-07 13
Figure 4: Dog numbers have recovered slightly in 2007, although not enough to offset a decline in cats 15
Figure 5: The number of people who are economically active has grown in the last 10 years 16
Figure 6: The prevalence of smaller households has made it more difficult to keep a large animal 18
Figure 7: London has the lowest pet ownership in the UK 19
Figure 8: UK pet population by species, 2008 21
Figure 9: Pet owners are most likely to own dogs and cats 22
Figure 10: Price remains the most important decision behind a consumer's purchase choice 27
Figure 11: Pet ownership is lowest amongst consumers aged over 60 28
Figure 12: Penetration rates were highest among consumers aged between 30 and 44 29
Figure 13: Penetration rates are high among affluent consumers 30
Figure 14: Most consumers purchase their pet insurance through a direct insurer 31
Figure 15: The telephone remains the most popular distribution platform for pet insurance 32
Figure 16: The market leaders significantly outspend the market 34
Figure 17: Direct mail's prominence in pet insurance reflects the importance of cross selling to the market 36
Figure 18: Underwriting for the pet insurance market remained highly concentrated in 2007 39
Figure 19: Higher penetration rates will fuel market growth 46
Figure 20: Growth will become marginal if product penetration declines due to high prices 49


TABLE OF TABLES
Table 1: UK Pet Insurance GWP, 2003-07 (£m) 12
Table 2: UK Pet insurance penetration rate, 2003-07 13
Table 3: UK dog and cat population, 1997–2007e (m) 15
Table 4: UK economic activity levels, 1998–2007 17
Table 5: UK households by size, 1971-2007 18
Table 6: UK dog and cat population by region, 2008 20
Table 7: The percentage of animal-owning households in the UK, 2007 22
Table 8: UK veterinarian industry numbers and pay inflation, 2003-07 24
Table 9: Top pets by ownership in the UK by age, 2007 28
Table 10: Penetration of pet insurance split by age group, 2007 29
Table 11: Penetration of pet insurance split by income bracket, 2007 30
Table 12: Distribution of UK pet insurance by channel, 2007 31
Table 13: UK pet insurance by distribution platform, 2006–07 33
Table 14: Top 10 pet insurance advertisers by medium, 2007 34
Table 15: Top 10 UK pet insurance advertisers, 2003-07 35
Table 16: Pet insurance advertising spend by medium, 2003-07 36
Table 17: Top UK pet insurers by market share, 2005-07 40
Table 18: Top UK pet insurers by premium income, 2005-07 42
Table 19: Key variables affecting pet insurance GWP, scenario one, 2008e–12f 45
Table 20: Scenario one: UK pet insurance GWP, 2003-12f 47
Table 21: Key variables affecting pet insurance GWP, scenario two, 2008e–12f 48
Table 22: Scenario two: UK pet insurance GWP, 2003–12f 50
Table 23: Top 10 pet insurance advertisers by medium, 2006 51
Table 24: Top 10 pet insurance advertisers by medium, 2005 52
Table 25: UK pet insurance competitors by premium income, 2005-07 53
Table 26: UK pet insurance competitors by market share, 2005-07 54

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