The pet insurance market is growing. The value of claims handled by pet insurers in 2020 were at their second highest annual amount according to figures from the Association of British Insurers (ABI)*1.
The figures highlight that in 2020:
Pet insurers processed claims worth £799 million – the equivalent to £2.2 million every day - mainly to cover the costs of veterinary treatment. This is the second highest figure since the ABI started collecting the data back in 2007, and 80% higher than the amount recorded ten years ago.
There were 978,000 notified claims. These included 212,000 involving cats, 734,000 for dogs, with an equivalent value totalling £148 million and £598 million respectively.
More cat owners had pet insurance than ever - 1.06 million. The value of claims, at £148 million, rose 10% on the previous year to an all-time high
The average claim value across all pet policies was £817, up 2% on 2019.
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This is not surprising given the number of pets that were bought in lockdown as owners took the benefit of home working.
According to the Pet Food Manufacturers Association Covid-19 Pet Survey a staggering 3.2million pets were brought in the 2020 lockdown period. The market has quite simply grown exponentially.
Costs for treatments are wildly variable, as an example:
£7,000 to treat a French Bulldog with a fractured leg.
£5,000 to reattach two toes to a cat after they had been crushed
£3,800 to treat a dog’s dislocated kneecap
£3,600 to repair right leg cruciate ligament damage in a Jack Russell terrier
£3,770 for the treatment of a fractured femur leg bone of a cat following an accident
In addition to these costs, The Times newspaper reported in 2021 that some vets are charging three times as much as online chemists for pet remedies. Medications ranging from painkillers to worming treatments are routinely several times more expensive if bought direct from the surgery.
On top of this, vet bills in the UK are not uniform in approach so it can be difficult to understand the treatment costs and diagnosis, compare against other vets for similar treatments or even do inflationary reviews. Few vets have fixed costs for treatments and whilst there have been some attempts by the BVRA to introduce standard coding this is not currently used.
Is the vet industry out of control? Without proper processes and price controls are insurers at the mercy of the vet sector? Procurato believe the answer to that question is no.
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Four op’paw’tunities to improving pet claims supply chain.
From the relative simplicity of benchmarking to creating your own dedicated vet network there are several ways to get under the skin of veterinary pricing.
It’s essential to have understanding and control of your spend and performance. Is your interpretation of good the same as your peers? Within your business you have significant amounts of data and qualitative information from your claims handlers that can provide you with the information you need to improve your capability. You may just need help to harness it, analyse it and make improvements.
2) Proprietary Coding – the exclusive tool from Procurato
Wouldn’t it be great if procurement experts, skilled vets and data scientists came together to translate the information on vet surgery invoices and notes to better identify diagnosis, treatments, and medicines for common medical issues? Well, the good news is we have. Procurato have developed a unique proprietary coding tool which means that we can map and model all possible treatments and ailments whilst looking at the costs and length of treatments and medicines. This means insurers can call out those surgeries who are over charging or extending the duration of the pet in their care
3) Reviewing indemnity spend
It’s vital to understand the granular detail about different breeds of cats and dogs whether that’s about life expectancy, prediction of likely illness for that breed or the typical injuries they would be likely to incur. We know that pets will cost a lot when they are young, that cost will reduce in their middle years but will rise significantly in their later years. Owners tend to stay with the same insurer via lifetime policies, so it is possible to plan indemnity spend in the long term and it’s essential that they do so.
4) Developing a dedicated vet network
The most direct way to ensure that you won’t be over charged for a pet claim is to have your own vet network. This is a dedicated network of vets who operate to the terms and conditions of the insurer.
Procurato have years of experience in setting up vet referral networks and whilst it may sound like a daunting task it’s more straightforward than you think. We have worked with many vets across the country, who received commercial benefit through regular referrals and prompt payments. Whilst pet owners can choose to use their own vet out of the network, they are often incentivised to use a preferred vet by way of excess fee waivers.
Referral networks can be bespoke, or pay as you go but either way, they ensure consistency and clarity of treatment and pricing for all pets.
The Procurato Way
The team at Procurato have 10 years of pet insurance claims supply chain experience and have developed pet referral networks for several UK insurers.
When you come to Procurato we will provide you with more detailed data than any big consultancy players to help you benchmark where you’re at, and indicate where you can save money and time, where you need to invest and what the return on investment will be. We will also work with you to implement the plan.
We’ll work with you and your stakeholders to understand your process chain and customer journey whilst also paying close attention to your strategic objectives. We will analyse your spend and performance and use our industry leading insight to provide recommendations for improvements.
Our unique proprietary coding tool will enable you to identify the vets you should be working with and calling out the ones who are overcharging and if you would like total control we’ll use of years of experience and contacts to help you create your dedicated vet network.
If you’d like to find out more about how Procurato could help you improve your pet claims supply chain please contact:
1 – ABI.org.uk 3 April 2021