A common complaint from pet insurance customers is that insurance companies increase prices, sometimes significantly, on renewal. This article goes through the possible reasons for these price hikes and explains how to avoid being left out of pocket.
Why has my premium increased?
There are several reasons why premiums rise. Sometimes it can be due to the pet aging, a claim being made or the development of an ongoing medical condition (such as Diabetes or Arthritis), as well as rising veterinary costs.
Another reason for rising premiums is the pricing strategy by insurance companies, which in 2013 prompted MPs to demand the FCA look into the practice of “rewarding” existing customers with higher premiums. No conclusion has been reached yet, but it’s certainly a move in the right direction.
The effects of increasing veterinary cost and claims
According to the Office of National Statistics, pet owners in the UK spent more than £2bn on veterinary care in 2012 alone. The Association of British Insurers say the average veterinary bill in June 2013 was over £300, which rose to over £600 by April 2014. The ABI also reported insurers were paying out approximately £478m a year for claims relating to vet bills alone, so it could be argued they have good reason to raise their premiums.
While some customers blame rising premiums on inflated veterinary costs, it’s important to remember there is no NHS for pets, and so the cost of pet health care is not subsidised like it is for us humans. The Society of Practicing Veterinary Surgeons says the reason behind escalating fees is that the cost for some treatments has risen far above inflation, as well as the availability of advanced and complex technologies and medication, which were not available only a few short years ago.
It can certainly be said that pet owners are investing a lot more in their pets’ care these days, paying for procedures such as ultrasounds and MRIs, which were not common practice for pets in the past. Vets can do a lot more for our furry friends, but that level of expertise naturally comes at a premium.
That said, the veterinary industry is largely unregulated, and so vets can essentially charge what they fancy. Additionally, a recent BBC discussion questioned whether vets deliberately charge inflated fees for treatment when they find out a pet owner is insured. So, much like it is recommended to shop around for the best insurance company, the same can be said for shopping around for the best vet. Much like with insurance premiums, there is a big difference between best and cheapest, but finding a vet who offers good value for money, and genuinely cares about your pet’s well-being, is possible.
Pet insurance costs increase with age
Just like humans, animals become more prone to illness and injury as they age. Insurance companies know this, and so premiums tend to rise accordingly. A survey by consumer focused financial website Which? found that premiums can more than double once your pet reaches 7 years of age. Additionally, insurance companies can also demand that customers pay a percentage of the vet costs, as well as the excess agreed when the policy was taken out. This practice is becoming increasingly common, even for pets under the age of 7.
Many companies, including our insurance partners More Than, don’t have an age limit for insuring pets, though sometimes some restrictions do apply when the pet passes a certain age, so be sure to check the terms and conditions in full.
Pre-existing medical conditions
A major contributor to insurance premiums increasing on renewal is the issue of medical conditions. Many people are left out of pocket when their pet becomes ill, as they have a time limited policy. This means the insurance would only pay for the treatment of a condition for a year, after which the owners would have to fork out the money themselves. Naturally, with chronic conditions, such as diabetes and arthritis, this can prove very costly over the lifetime of the pet. Most people with Per-condition and, more often, Lifetime policies don’t usually encounter this problem, though every case is different.
Even when the insurance company is willing to continue to cover an ongoing condition, it usually means the owner sees a big hike in premiums. This is because the pet will now cost the insurance company money, and so they want to cover their increased cost. Many people will claim this is unfair, as this is what they have been paying for since they took out the policy, but insurance companies claim rising vet fees are forcing them to up their fees (see above). This can be argued both ways, but we believe the situation can be improved.
We have yet to find a solution for ongoing medical conditions, though we do have a group for pets with pre-existing medical conditions. The pet has to not have shown any symptoms or have any treatment for at least two years, but the condition will be covered under the new policy, if conditions are met.
What are my options for changing pet insurance providers?
If your pet is not suffering from an ongoing medical conditions, you might consider shopping around for a better quote. Unfortunately, unlike car insurance, the pet insurance industry does not offer a ‘no claims discount’ and so you may well find you are better off switching provider.
That said, as mentioned, if your pet does have a medical condition, you are essentially held captive by your insurance provider. In this case, you must decide whether you will be better off switching providers and losing the cover for your pet’s condition (you may be able to come to some arrangement regarding treatment with your local vet), or whether you would rather have the security of knowing your pet is fully covered, and fork out the increased premium.
It is important to note, however, that if you are on a time-limited or per-condition policy, the money for treating your pet’s condition is likely to eventually run out, meaning you will have to pay for care yourself. This will only be avoided by taking out a lifetime insurance policy, though even these sometimes come with limitations as to the level of cover provided per condition, and so it is always important to read the terms and conditions thoroughly and insure you know exactly what is and isn’t covered.
Some people choose to self-insure when their pet hits a certain age, by putting a set amount of money away each month for vet fees. While this might work for some, it is vital to remember that this option does not cover you for public liability, which, if action is taken against you, can run into millions. Additionally, while paying over £1,000 for insurance for the year may seem excessive, it provides you with cover worth several times that amount. Many illnesses and injuries incur vet fees in the thousands, which your savings may not stretch to.
Do I have to cancel my insurance before changing insurer?
Yes, you must make sure you cancel your existing insurance policy before signing up to a new one, to avoid paying twice. It’s worth double checking with your bank that the direct debit is deactivated as well. Most insurance companies ask that you call them to cancel your policy. You can do this at any time, but bear in mind that if you cancel before your policy is due for renewal, you may be liable to pay the premiums for the remainder of your current period of insurance.
When changing pet insurance providers, there are a few crucial things to keep in mind:
- When you sign up with a new company, there is usually a 14 days period in which you cannot claim. This is done to protect the insurance company from people taking up a policy, knowing they need to make a claim. It means that if your pet needs treatment within this time period, you may not be covered for the fees. However, some companies also use this 14 days as a ‘cooling off’ period, meaning you can cancel your policy if you are unhappy with it for any reason.
- As mentioned before, existing medical conditions in your pet may not be covered under a new policy. This is not applicable to policies which offer to cover existing medical conditions if no symptoms have been shown or treatment administered within 2 years, but it is extremely important to be fully aware of everything that is and isn’t covered by your policy.
- Dental work is not automatically covered with many policies. Make sure you check this, rather than just assume it will be covered. You can find out which companies cover dental by reading this article we wrote.
How can Bought by Many help?
Bought by Many was created to help consumers save money by using collective buying power. We believe pet insurance should be fairer for everyone, including those with pets with ongoing medical conditions. Check out our full list of breed specific groups, to save money on insurance for your furry friend.
Additionally, have a look at our pet insurance articles for a wealth of information regarding your pet insurance options and reviews of the different brands.