Are we barking mad to spend £1.2BN a year on pet insurance?
Premiums are rocketing. It’s a nightmare to claim. And it can be cheaper to insure your home than your dog. So...
MANY pet owners regard their dog or cat as a member of the family, and will happily pay a premium to protect them. But a Money Mail investiga-tion today reveals just how far the pet insurance industry is ballooning out of control.
Thousands of owners are being forced to ditch vital cover because pet insurers are hiking costs to staggering levels.
Worse yet, after handing over thousands of pounds for insurance in good faith, many owners are discovering their policies will not pay out when their animal falls ill.
In some cases, insurers rely on onerous terms and conditions to refuse cover, while others trawl through vet records searching for an excuse to throw out claims.
The pet insurance industry is currently worth a huge £1.2 billion and is on course to hit £2 billion by 2023.
Around 45 pc of the nation’s households have a pet, with more than half of them covered by insurance. Today, our investigation exposes how: PET insurers made £425 million (after claim payouts) in a year, selling policies worth £1.2 billion.
IT NOW costs more to insure the average cat than a home and its contents.
CALLS to the Financial Ombudsman about pet insurance have soared 113 pc in five years.
SMALL print in one major policy restricts treatment cover to £500, when surgery can typically cost £1,500.
OWNERS are left trapped after making just one claim because other insurers often refuse to cover pre-existing conditions.
MORE than one in three pet owners now say insurance is not worth the money.
Owners buy pet insurance to protect them against unexpected vet bills. Some insurers will also pay out if your pet dies, is lost or stolen, or damages someone else’s property.
The first pet policy in the UK was written in 1947, but the industry has only recently taken off, with more people owning animals and vet bills soaring.
Most owners now pick lifetime cover for their pets, which comes with a claim cap on total annual cover and for each condition. Once the limit is reached, no claims can be made until the policy is renewed — often at a higher price.
VET BILL WAS £5,000 — WE ONLY GOT £1,000
WHEN Lynne Brown’s Shih Tzu Meg collapsed after chasing a fox in the garden, she rushed her to a vet.
Meg, a much loved member of the family for ten years, was unable to walk, so the vet kept her in overnight. The dog needed spinal surgery for a slipped disc and was put on a course of medication. So when retired social worker Lynne received a bill in excess of £5,000, she was relieved she had taken out pet insurance.
The couple had paid a monthly premium of around £36 with The Equine and Livestock Insurance Company (E&L) since 2009 — costing them thousands of pounds over the years — and never previously made a claim.
Yet when she contacted her insurer to request a payout for the slipped disc, she discovered she was covered only up to £1,000 per condition, and up to a maximum of £4,250 each year. Lynne, married to retired driving instructor Mike, 69, says: ‘Hardly any treatment would be covered by that amount because vets’ bills are so high. As a responsible dog owner, I have to have insurance.
‘If my dog caused an accident, the policy would pay my legal costs. But when it comes to pay-ing out for Meg’s treatment, it’s a complete rip-off.’
An E&L spokesman says: ‘This cover level was made clear to Mrs Brown verbally and in writing during policy inception in 2009, and in writing at each of the nine renewal points thereafter.’
Many owners hold a policy with Petplan, while Animal Friends, Tesco Bank and Direct Line also insure large numbers of UK pets.
It is common for policies to cap the amount they will pay out per condition and also per year. The Animal Friends basic policy has just a £500 annual limit on any one condition. This is despite surgical treatments costing an average of £1,500. Even a set of blood tests costs around £130, while X-rays are up to £300, according to price com-parison site MoneySupermarket.
Vets can also charge £150 for out- of-hours emergency treat-ment and an overnight stay could top £500.
Animal Friends’ basic policy also has an annual limit of £3,000. However, an ongoing treatment such as chemotherapy will cost around £5,000. It also won’t pay out if your pet is stolen and it doesn’t involve ‘forcible or violent entry into a secured area’. The policy pays you only up to £350 if your pet dies — and you won’t get any refund on the premium if you paid for a year upfront. If you sold your car mid-insurance policy you’d typically be refunded pro-rata for any unused months minus an admin fee.
INSURING YOUR HOME IS CHEAPER
AVERAGE pet insurance premi-ums for dogs rose 6 pc to £324 in 2017, while cat cover went up 7 pc
to £171, according to the latest report on the industry from market research firm Mintel. By comparison, the average home building and contents insurance policy now costs just £162 a year, according to the AA British Insurance Premium Index.
Mintel’s research also reveals that more than a third of owners do not believe pet insurance is good value for money, while 13 pc admitted to giving up their cover after it became unaffordable.
The Financial Ombudsman, which oversees complaints about insurers, reports that calls about pet cover have soared 113 pc from 727 in 2013 to 1,554 in 2018.
The Ombudsman says common complaints are about pre- existing conditions, excess payments and changes to policies when pets get older.
One owner, whose kitten was run over and killed, was first denied a £700 claim by Red Sands after the insurer said there was no proof of purchase and she was not entitled to death benefits as the cat had been given to her as a gift. The Ombudsman demanded the insurer pay up, saying there was no evidence at all to support Red Sands’ suggestion that the pet wasn’t bought in a ‘genuine transaction’.
Another owner took Legal & General to the Ombudsman after it refused to pay over the death of her rescue dog.
The insurer had scoured through vet records which revealed the dog had a heart murmur. But the Ombudsman said the new owner did not know about this and, therefore, was entitled to claim.
James Daley, of consumer campaign group Fairer Finance, says the rise in complaints is down to the fact that the market is booming and many policies are just not of ‘ very good quality’.
He adds: ‘A lot of these policies are designed not to be there for you when you need it. A lot are very profitable [to the insurer], too. Customers are not getting a kind deal. Importantly, they do not explain the limitation to customers when they are buying them.’
Martyn James, of complaints site Resolver, says grievances about pet insurance shot up 17 pc in the last financial year to 261. He says: ‘The big issue is the lack of players in the sector. People are more likely to claim on pet insurance so many insurers pulled out of the market, leaving less choice and higher costs. People are also able to keep their pets alive longer thanks to new treatments and vets’ bills can be huge.’
WE PROTECTED OUR CAT BUT STILL PAID £1,000
LAST month Money Mail’s letters editor, Tony Hazell, was forced to intervene to help the owner of a Cavachon dog who had been twice denied a payout by her pet insurer — despite paying extra to make sure she would be covered.
Since then we have been inundated with emails and letters from other pet owners who have also had claims rejected.
Joe Carr, 32, and his wife Helen, 31, bought their cat, Lumi, from a breeder in 2011 when the cream British Shorthair was two years old. The couple, who live in Drayton, Hampshire, bought pet insurance with Animal Friends around five years ago and were paying around £7 a month. Joe and Helen, a fulltime mum to their one-year-old son Theo, took Lumi to the vets in 2015 because she had been suffering from diarrhoea.
The bill, which included a checkup and a course of antibiotics, came to around £70 — so the couple decided it was not worth making a claim.
But early last year Lumi’s weight plummeted from 5kg to 2.1kg, while her stomach problems became far more severe and she began vomiting.
By October her owners had spent £600 on vet bills and decided to put in a claim. But the insurer rejected it on the basis it was a ‘pre-existing condition’ — citing the 2015 course of antibiotics and the minor bouts of stomach problems.
Eventually, Lumi was put to sleep in February after the couple had spent more than £1,000 treating her.
Joe says: ‘ Every now and then Lumi would have diarrhoea, just like any other cat. It would maybe be a couple of times a year.
‘The common stomach problems Lumi had before were nothing to do with the illness she had in the last 12 months of her life.’
Joe took Animal Friends to the Ombudsman but it ruled against them, claiming that had the various visits to the vet been declared, a digestive exclusion would have been placed on their policy.
An Animal Friends spokesman says: ‘ We are dependent on policy holders making accurate declarations when they buy a policy.’
Pamela Bouyssou was forced to fight for six weeks to get a payout for her dog Alfie — a ClumberSpaniel-Poodle crossbreed.
Pamela, 67, had originally insured Alfie, now six, for £30 a month with Petplan.
When he was eight months old he was taken to the vet after a grass seed became lodged in his paw, causing him to go lame.
Pamela, a grandmother of four, from Wimborne, Dorset, switched to LV= in 2015 for £23 a month.
But the following year, Alfie was limping again. An X-ray revealed nothing, but ten sessions of hydrotherapy, at a cost of £30 a session, were recommended.
A claim was submitted and LV= paid out the £300 cost of the hydrotherapy and £100 for the X-ray.
Two years later Alfie began to struggle again. After examining him, a vet believed there was something wrong with his left elbow.
Three massage therapy sessions at a cost of £30 each were prescribed and LV= paid out £90. But when Alfie went lame again in September last year, a CT scan was scheduled in October — at a cost of more than £1,000.
LV= refused to pay, citing his visit to the vet when he was covered by Petplan.
Pamela says: ‘It was ridiculous. Alfie had been eight months old when he had stepped on a grass seed and it had been removed. I don’t know how they could link the two.’ It was only after she threatened to refer her case to the Ombudsman that LV= finally agreed to pay the £1,035 bill.
She has decided she will not renew her policy in August. Pamela says: ‘I am just going to put money aside myself into a savings account.’
An LV= spokesman says: ‘We’re sorry for the delays that Ms Bouyssou has faced during her claims for Alfie. This has been due to our review process being thorough, but not always fast, and we’re glad that the correct outcome was reached in the end.’
FORCED TO FIGHT FOR JUST £132
INSURERS are also quibbling over trivial claims — forcing owners to fight for payouts for months. Terry de Winne, 78, and wife Heather, 70,
had to battle for three months over a £132 claim with Animal Friends. The couple from Bangor, Northern Ireland, got their Pomeranian Honey from a rescue centre and were unsure exactly how old she was . A vet estimated the stray was between six and 12 months old. By the time Honey had been in the family for around ten years, she developed an infection that required blood tests and antibiotic treatment at a cost of £263. Her owners, who by then were paying £146 a year for her insurance, tried to submit a claim. But Animal Friends said Honey’s date of birth had been incorrect when her policy was first taken out. Terry and Heather were told that as Honey was more than ten years old they would lose 20 pc of the payout after the £99 excess was taken off — leaving the couple with just £132. The company delayed the process further by claiming the de Winnes owed it £23 in premiums, because it had not been told Honey was more than ten years old. But this £23 fee was later waived.
When Terry tried to speak to the company over the phone, he was told he couldn’t discuss the policy because it was in Heather’s name.
Terry says: ‘It was months of numerous phone calls and pages of correspondence. They were trying everything to avoid paying out under the guise that they had not been given correct information.’
Eventually, after Terry made a formal complaint, the couple finally received their £132 payment in January. They have now cancelled the policy and intend to use savings to pay for any future treatment.
An Animal Friends spokesman says: ‘At no point was the policyholder denied payment, but it was a delayed process partly due to accurate information being required from the policyholder and vet, and also partly due to Animal Friends delays.’
TRAPPED BY SOARING CHARGES
LESS than a fifth of policyholders switch provider to get a better price, according to Mintel. This is often because once owners make a claim, other insurers will exclude the condition that needed treatment.
It means that many families find themselves trapped in policies that get more expensive every year.
Steven Mendel, chief executive of Bought by Many — an insurer that will cover pre- existing conditions — says: ‘Some owners end up paying thousands of pounds a year so that a pet’s condition remains covered, while others cancel their cover if it becomes unaffordable, leaving them at risk of paying for future treatment.’
Retired primary school teacher Libby Scott took on black Labrador Bella in 2008 when she was nine months old. But she and her late husband Philip would soon become trapped in ever-increasing insurance premiums that soared to more than £4,680 a year.
The couple from Yate, near Bristol, first insured Bella in 2009 with Petplan for £294 a year and later with Homebase (now run by Argos Pet Insurance) for £244.
But Bella was diagnosed with joint problem hip dysplasia in 2012 and had to have an X-ray which led to a bill of £287 and the premium increase to £505.
Libby, 68, says: ‘ From the moment I was told she had hip dysplasia I knew I was trapped in the policy because other firms were unlikely to insure me; and even if they did, they wouldn’t let me claim for anything to do with the dysplasia.’
Bella had a ‘pea- sized’ cancerous lump removed from her neck in 2016 at a cost of £616 — causing her premium to rise to £1,864.
She later had a growth removed from her gum at a cost of £420 and worked up a £515 vet bill after scoffing mince pies — forcing the premium up to £2,603.
Libby adds: ‘At that point, it was the most expensive monthly cost we had in terms of bills.’
In late 2017, Bella had her right eye removed due to a tumour, at a cost of £2,555. Five months later the renewal documents came through with an 80 pc premium increase — to £4,684.
Libby says: ‘Philip had only died a few months beforehand and I couldn’t afford those premiums, so I decided to cancel the policy and put money away myself.’
An Argos spokesman says: ‘There are many factors that go into setting our premiums, and in the case of Bella, her age, medical history, her breed — as well as rising vet fees — were all factors which led to increased renewal prices.’
Libby later bought insurance with Bought by Many for £1,346 a year, which covers her up to £500 for previous conditions.
Rebecca Ashman, a vet at animal charity PDSA, says: ‘As a general rule, cheaper policies often have lower levels of cover in the event of a claim. So carefully compare policies for their level of cover and, before purchasing, read the terms and conditions.’
Daniella Dos Santos, junior vicepresident of the British Veterinary Association, says: ‘Owners must have a clear understanding of what is, and is not, covered by their insurance policy.
‘This includes going over the small print, including any exclusions — such as for pre-existing conditions or whether the policy provides lifetime cover for a particular condition — to prevent any unpleasant surprises in the future.’
An Association of British Insurers spokesperson says: ‘There is no NHS for pets, and insurers are helping many pet owners cope with what can be expensive visits to the vet.
‘The average vet bill claim is £757, with treatments often costing thousands of pounds — far more than the average annual premium.
‘The cost of cover reflects rising vet costs. But pet insurance remains competitive, and it is important to shop around to make sure you have the policy that best meets your needs.’