Insurance Daily News

Pet insurance premiums drop 14% on low-cover policies

Average Lifetime pet insurance premiums in the UK fell 14% over the past year, according to Defaqto’s latest Pet Insurance Pricing Index. The biggest reductions were seen on the cheapest cover levels – policies that provide at least £1,000 of veterinary fee cover dropped 14%, while those offering at least £5,000 fell 7%. Prices slipped 6.1% in Q3 2026 and are now 12% lower than at the start of the year, with monthly declines of 1.7% in July, 4.1% in August and 0.4% in September.

The price cuts were not uniform across product types. Lifetime cover saw the steepest falls, whereas Maximum Benefit and Time-Limited policies fell about 4% and 1% respectively. Defaqto attributes the sharper reductions to heightened competition on low-cover tiers, noting fewer brands compete in the Maximum Benefit and Time-Limited segments. All animal groups experienced price declines.

Frances Luery, product manager at Defaqto, linked the price movement to upcoming CMA veterinary reforms slated for 2027, which aim to provide clearer pricing and written estimates for pet owners. While the reforms are not expected to lower premiums immediately, they may help owners make more informed choices and could eventually influence veterinary fee inflation. Luery also highlighted ManyPets’ use of ChatGPT for indicative quotes as an early sign of AI’s role in the pet-insurance market.

For brokers handling pet cover through personal lines or affinity schemes, the narrowing gap between low- and high-cover policies is a key focus. The rapid fall in cheapest Lifetime quotes makes entry-level cover more attractive, yet a £1,000 limit can still be exhausted quickly given persistent high vet fees. Meanwhile, modest price drops on higher-cover policies improve their recommendation appeal.

Why it matters

The widening price gap makes higher-cover pet policies more affordable, prompting brokers to reassess product recommendations for cost-conscious owners.

FAQ

What was the overall annual change in average Lifetime pet insurance prices?
Average top-five Lifetime pet insurance prices fell 14% over the past 12 months.

Which cover level saw the largest price reduction?
Policies offering at least £1,000 of veterinary fee cover fell 14% over the year.

How did Maximum Benefit and Time-Limited policies change?
Maximum Benefit policies fell about 4% and Time-Limited policies fell about 1%.

What future regulatory change could affect pet insurance premiums?
The CMA’s veterinary reforms, expected to start in 2027, aim to provide clearer prices and written estimates.

Source: Insurance Business UK. See the original source for full details.