Understanding the Global Pet Insurance Market: Growth Drivers, Challenges, and Innovations

Written by Matthew Parker, Managing Director at Procurato 

Understanding the Global Pet Insurance Market: Growth Drivers, Challenges, and Innovations   

The pet insurance market is experiencing rapid growth, driven by increasing pet ownership, rising veterinary costs, and evolving consumer expectations. This article explores key industry trends and challenges shaping the sector. Additionally, it examines opportunities for insurers to expand into new markets, enhance digital capabilities, and improve claims processing to meet the demands of a growing and competitive industry. 

Source: Canva

Market Growth and Industry Overview  

In 2024, the global pet insurance market was valued at approximately £14.73 billion (USD 18.32 billion)*, with a forecasted CAGR of 17.97% between 2025 and 2030. The UK market, representing 15.6% of this global total, is valued at £2.1 billion and supported by 86 providers offering coverage to over 4.4 million insured pet owners.  

Beyond the UK, this sector shows significant expansion potential. North America is projected to lead in revenue by 2030, while France is expected to dominate the European market. Italy stands out as the fastest-growing region, with the market forecasted to reach £787 million by 2030. 

Key factors driving this growth include a surge in pet adoption during COVID-19 lockdowns and the trend of pet humanisation, which has strengthened the emotional bond between owners and their pets. These shifts have spurred demand for advanced veterinary treatments, increasing veterinary costs and fuelling the need for comprehensive insurance solutions. Additionally, innovative schemes like multi-pet insurance policies have further expanded the market, offering tailored solutions to meet evolving consumer needs. 

Key Trends Shaping the Pet Insurance Market 

1. Comprehensive Coverage on the Rise 

   
   

The growing demand for insurance for pets has significantly influenced consumer expectations, with customers increasingly moving away from generic, one-size-fits-all policies. Today’s pet owners seek comprehensive plans that provide robust coverage tailored to their pets’ needs. In 2024, the accident and illness segment dominated the European Pet Insurance Market, accounting for 84.07% of the total share. This surge is driven by the coverage for acute and chronic conditions, medications, diagnostic tests, and more. As a result, this segment is poised for continued rapid growth in the coming years.  

2. Personalised and Niche Insurance Policies 
   

Evolving consumer needs have prompted insurers to develop tailored solutions for niche segments, including coverage for specific breeds, senior pets, and exotic animals. Providers are also offering customisable plans to align with varying budgets and requirements. For example, Nationwide’s pet protection product enables pet owners to tailor coverage categories, catering to diverse needs. This flexibility emphasises the industry’s commitment to personalisation and its potential to attract a broader customer base. 

3. Digital Transformation 
   

Technological advancements are revolutionising the pet insurance industry by improving efficiency and customer experience. AI-powered claims processing ensures faster payouts (SpendQube Claims Processing Solution), while telemedicine platforms enable virtual vet consultations. Mobile apps and wearable devices offer real-time health monitoring, enhancing service accessibility. These innovations not only streamline operations but also meet evolving consumer demands, setting new standards for transparency and convenience. As a result, digital transformation is reshaping the industry's future and driving its growth.  

4. Regulatory Influence 
   

Regulatory influence is shaping trends in this industry because it creates a framework that both standardises and drives demand for insurance policies for pets. In Germany, dog owners are legally obligated to register their pets and pay dog tax, with some states mandating Dog Liability Insurance to ensure financial protection. Meanwhile, In the US, NAIC's Pet Insurance Model Act strengthens consumer confidence by increasing transparency and safeguarding policyholders. These regulatory measures create consistency, address key issues such as preexisting conditions, and encourage insurers to develop more innovative solutions. As a result, regulation is driving both market growth and heightened industry competition. 

Challenges in the Pet Insurance Market 

Our independent research, conducted with representatives from all major UK pet insurance providers, highlights critical inefficiencies in claims processing. 74% of these claims require at least half a day to confirm coverage, and only 5% of insurers have the capability to automatically input vet-provided data into claims systems. This reliance on manual processes leads to prolonged settlement times, with the average pet claim taking 30 days to be resolved. 

Additionally, pet claims inflation has risen by 21% in recent years, making it increasingly difficult for insurers to maintain affordable premiums. In 2023, the average insurance claim was £668, nearly 50% higher than the average policy cost, highlighting the financial strain on insurers and policyholders alike.  

Moreover, the surge in pet ownership has resulted in a higher frequency of claims, with 1.8 million claims notified in 2023—a 32% increase from 2022. This escalation challenges insurers' operational capacities and financial sustainability. Collectively, these factors signal the need for the industry to innovate and adapt to maintain service quality and financial viability. 

Opportunities in the Pet Insurance Market 

This industry presents significant growth opportunities, particularly in underserved regions like Asia-Pacific, which is expected to grow at a rate above 18% . This emergence is due to growing trend of adoption, improving veterinary infrastructure and development of economies. Expanding into these markets allows insurers to tap into a growing policyholder base and establish a competitive edge. 

Leveraging data insights for improved policy pricing and risk assessment is another key opportunity. Utilising advanced analytics and AI-driven models to refine pricing strategies and offer personalised coverage can enhance customer experience and satisfaction. 

Additionally, collaborating with veterinary networks can help standardise pricing and streamline claims processing. With pet insurance claims incurred in the UK surpassing £1.2 billion in 2023, such partnerships can improve cost management and transparency.  

By embracing these strategies, insurers can remain competitive, drive innovation, and meet the evolving needs of pet owners worldwide. 

Conclusion 

The pet insurance market is at a pivotal moment, balancing rapid growth with structural challenges. While rising veterinary costs and claims inflation create financial strain, digital transformation and regulatory support offer pathways for innovation. Insurers that invest in automation, data-driven policy pricing, and streamlined claims processing will be better positioned to meet evolving consumer expectations. 

As competition intensifies, embracing new strategies will be key to maintaining profitability and customer trust. For a practical example of optimising claims handling, explore Procurato's case study on auditing claims processes. 

*(Conversion rate of $1=£0.80)