As of 2023, there were 12 million dogs recorded as pets in the UK. The cost of owning a dog is on a relentless rise, presenting a significant challenge for both pet owners and insurers. Dubbed "dogflation”, this trend highlights the increasing expenses related to pet care, including veterinary treatments, pet food and insurance premiums. Although pet owners experienced a reduction in their insurance premium in March of this year, it remains 20% higher than the previous year. We set out to discuss the effect of dogflation on the pet insurance industry and how CRIF solutions can assist insurers in providing more competitive premiums while retaining existing clients.

Understanding the Factors Behind Pet Insurance Inflation

Dogs Trust, the UK's largest Dog Welfare Charity, estimated a "dogflation" rate of 9%, against 4% inflation generally in the UK. The escalating costs of veterinary treatments contribute significantly to the rising premiums in the pet insurance industry.  Veterinary expenses have risen substantially over the last few years, so much so that the Competition and Markets Authority (CMA) have opened an investigation into the industry to discover why vet bills have increased more than any other goods or services. Possible reasons could be higher fixed costs for businesses but also a higher demand for qualified vets in the UK. 

Also, pet food has been increasing in recent years and is due to rise in the future looking at Statista’s report on the average pet food price in the UK between 2018-2028. Since pet food is currently in the 20% VAT bracket, organisations and members of parliament have proposed to temporarily cut the VAT on pet food to alleviate pressure during these difficult times.

What Are the Most Expensive Breeds in the UK?

The Insurance Emporium has carried out research and identified the top 5 dog breeds in 2024 that are less affordable to buy and look after:

Breed Average cost to buy Annual cost of pet insurance Pet food cost (annual) Total
1 Bulldog £1,867.70 £261.54 £626.16 £2,755.39
2 German Shepard (Alsatian) £874.03 £149.70 £1,025.83 £2,049.57
3 Cavapoo Cross £1,634.72 £55.19 £271.78 £1,962.48
4 French Bulldog £1,420.84 £224.24 £314.41 £1,959.49
5 Hungarian Vizsla £1,165.73 £117.48 £666.13 £1,949.34

It is mainly due to their health conditions that make these breeds more vulnerable. Consequently, they often require treatments and cures and are more expensive for a pet owner to insure.

The Impact on Pet Owners and Insurers Alike

The consequences of dogflation extend beyond financial strain, according to Dogs Trust there is a surge in pet abandonment due to affordability concerns, with over 45,000 requests from pet owners in 2023.

Meanwhile, insurers struggle to balance competitiveness with profitability in their pricing strategies.

Their key challenges are:

  • Pricing Optimisation: Inflated pet insurance costs compel insurers to reassess their pricing strategies. Providing competitive premiums, and personalised cover while protecting their profitability becomes increasingly difficult.
  • Underwriting Complexity: Rising costs necessitate more complex underwriting processes to check pet details and accurately assess risk.
  • Client Retention Pressures: Escalating premiums may strain the relationship between insurers and policyholders. Pet owners facing higher insurance costs may seek alternative providers or opt to forgo coverage altogether, leading to reduced client retention.
  • Profitability Challenges: The increase in veterinary expenses and claims payouts directly impacts insurers' profitability. Without corresponding adjustments in premiums, insurers face diminished profit margins and heightened loss ratios, jeopardizing their financial stability.

Innovative Pricing Solutions to Mitigate Pet Insurance Inflation By integrating new data into the premium pricing process at the point of quote, insurers can confidently price policies more competitively, assisting in growing market share, improving profitability, and preserving loss ratios.

Pet Check facilitates instant verification of pet details, reducing the risk of fraudulent claims and ensuring accurate coverage for pet owners. Insurers can simply enter the pet’s name, address, date of birth, sex, species, breed, pre-existing conditions, and policyholder name. They will immediately receive a suite of key indicators including any inconsistencies identified and the level of confidence.

With Pet Score insurers can assess risk more effectively by incorporating geographic and economic variables, enabling competitive pricing while preserving loss ratios.

By leveraging CRIF pricing sophistication solutions, both pet owners and insurers can navigate the complexities of pet insurance inflation more effectively. Pet owners can gain access to more affordable cover tailored to their needs, while insurers can streamline underwriting processes, diversify cover and grow their book of business.

CRIF's Pet Solutions offers a beacon of hope for pet owners and insurers alike.

Related resources

Untitled Design 12

Paws-itive Changes

Elevate Your Pet Insurance Strategy for Improved Pricing and Risk Management

Read more
Pandemic Pets And Insurance CRIF

Pandemic Pets and Insurance

Geo-marketing, risk indicators and potential growth in the pet market.

Read more