UK pet insurance has entered a new cost phase, and the numbers no longer fit the usual explanation.

Payouts rose from £799 million in 2020 to £1.23 billion in 2024, a 54% increase. For an industry used to explaining cost movement through general inflation, that price increase does not add up on its own. Something structural has changed in how vet care is priced and delivered, and insurers who treat this as a temporary spike are going to keep getting caught out.

The market itself has shifted underneath insurers’ feet. Vet care is now priced and delivered by fewer, larger players, price transparency has all but disappeared, and the treatment side of a claim, not drug costs, is doing most of the damage. None of this is a single, isolated issue. It is several pressures converging at once, and it is forcing insurers to rethink how they price, underwrite, and handle claims.

If you work in UK pet insurance, this article, and the report behind it, is built with you in mind. It walks through what has changed in the market and why, where those cost pressures are actually coming from, and where to start looking within your own book. From there, it turns to what can be done about it: practical ways to approach claims inflation and cost control, and a clear view of what is likely to work and what is not.

What Is Really Driving the Increase in Pet Insurance Claims Costs

Claims frequency and claim severity have both played a part, just not at the same time.

Between 2020 and 2023, frequency did most of the damage: claims notified per insured pet rose from 0.233 to 0.391, growth the rise in the insured pet population alone cannot explain. Then, in 2024, that pattern reversed. Claim volumes held broadly flat while the average cost per claim kept climbing.

That shift matters, and it is easy to miss if you are not looking for it. Severity, not frequency, is the bigger problem now, and it is compounded by a market where insurers have far less control over price than they used to.

Vet Prices Have Risen Far Faster Than Inflation

The booster injection is one of the few vet prices tracked consistently over time, which makes it a useful benchmark for the wider cost of pet care.

Fees rose 48.4% over a period where general inflation, measured by CPIH, rose by roughly 20%. That is a 28-point gap with nothing to do with the broader economy. And for that identical injection, the price ranged from £23 to £107 depending on the practice, a 4.6x spread for one procedure.

That range exists because most practices do not publish prices, and no standardised comparison tool exists for vet services. This is not a market failing quietly. It is a market with no functioning price signal at all.

Consolidation Has Changed Who Sets the Price

Ten years ago the UK vet market was mostly independent, owner-operated practices. Today six large veterinary groups collectively control around 55% of UK practices, and in many towns and suburban areas two or three corporate groups own most or all of the accessible options.

Several are private-equity backed, and the CMA found that some were earning returns materially above what you would expect in a genuinely competitive market. For pet insurers, that concentration is the difference between negotiating with a supplier and accepting a price.

The Overlooked Cost Driver: Treatment, Not Drugs

Drug pricing gets the most attention, but it is the smaller part of the bill.

Professional service fees, meaning consultations, diagnostics and procedures, make up roughly 40 to 80% of the cost of a typical illness claim, well ahead of pharmaceutical spend. There is a gateway effect too: the price of the initial consultation correlates strongly with the total cost of the claim that follows. The opening fee is not just one line item, it is a signal for where the entire cost trajectory is heading.

Why the Market Will Not Self-Correct on Its Own

Regulatory intervention alone will not fix this.

In March 2026 the CMA published the final report of its market investigation into veterinary services for household pets, confirming significant and widespread problems in the market and setting out a legally binding package of remedies. Those measures cover mandatory price transparency, disclosure of group ownership, capped written prescription fees, written estimates for higher-value treatment, and itemised bills, with implementation required through 2026.

Those remedies will help. They will not, on their own, reverse the cost trajectory. Status quo bias keeps owners with their existing vet even when cheaper options exist nearby, and insurance removes what little incentive was left to question the bill. The responsibility for managing this sits with insurers themselves, in claims handling, pricing, underwriting, and the customer journey. Regulation will help at the margins. It will not do the job on its own.

What UK Pet Insurers Should Do About Rising Claims Costs

Real change depends on what insurers do inside their own claims operations, product, customer journey, pricing and underwriting, not just what regulators do to the market around them.

Three broad paths sit open from here.

Do nothing, and allow other players to reshape the market in their own interests, with insurers having little influence over the outcome.

Challenge the market, intervening more actively in the veterinary supply chain to create greater control and potentially stronger long-term results.

Take the middle path, introducing a smaller number of targeted interventions rather than overhauling the entire operating model, capturing a partial but still meaningful improvement.

The report explores all three paths in more depth, including what each could mean for insurers and where to start. One useful question to ask today is this: how much control do you currently have over the total cost of a claim and, with your existing setup, how much are you actually able to influence it?

Want the Full Report?

This article only scratches the surface. Beyond the evidence, the full report sets out what insurers can actually do about it, with a full set of practical recommendations across claims handling, pricing, and underwriting, and particular relevance for insurers managing aging books.

The report breaks down:

• The complete evidence base behind the frequency-to-severity shift
• Procurato’s proprietary invoice-level analysis of treatment cost drivers
• The CMA’s findings and what they mean for UK pet insurance
• Where insurers should focus first, and what “good” looks like across an aging book