Market Trends: The U.S. Market for Pet Insurance

Published: August 1, 2003 - 150 Pages

Table of Contents

Chapter 1: Executive Summary
Scope and Methodology
  • Scope of Report
  • Report Methodology

Market Size and Composition

  • Total Pet Insurance Market Revenues Up 342% Since 1998
  • What’s Wrong with This Picture?
  • Great Expectations
  • Market to Reach $667 Million by 2007

The Competitive Situation

  • VPI Out Front
  • Figure 1-1: Share of U.S. Pet Insurance Market Revenues by Company, 2002 (percent)
  • Targeting Pet Owners—Directly
  • Banfield the One to Watch

The Consumer

  • The Quintessential Purchaser
  • Pet Owners Online
  • Household Ownership Rates at 32% for Dogs, 25% for Cats
  • Table 1-1: Household Penetration Rates for Selected Pet-Owning and Pet Care Product Classifications, 2000 vs. 2002 (U.S. adults)

Looking Ahead: Trends and Opportunities

  • The PETsMART/PETCO Probability
  • Entrants from Retail, Financial, and Foreign Camps
  • Increased Competition Will Mandate Change

Chapter 2: The Market
Introduction

  • Market Definition
  • Range of Coverage
  • Typical Restrictions
  • Other Services
  • Equine Insurance Excluded
  • Figure 2-1: U.S. Pet Insurance Market Revenues, 1998-2002 (in millions of dollars)

Market Size and Composition

  • Total Pet Insurance Market Revenues Up 342% Since 1998
  • Table 2-1: U.S. Pet Insurance Market Revenues, 1998-2002 (in millions of dollars)
  • Policies for Dogs Account for Lion’s Share of Market
  • Figure 2-2: Share of U.S. Pet Insurance Market Revenues by Animal Type, 2003 (percent)

Market Drivers

  • Overview
  • Table 2-2: Average U.S. Household Expenditures on Pet Care Products and Services, 1994-2001 (in dollars)
  • Table 2-3: Average U.S. Household Expenditures on Insurance, 1994-2001 (in dollars)
  • What’s Wrong with This Picture?
  • Sharp Increases in Spending on Veterinary Services
  • Table 2-4: Aggregate Expenditures on Veterinary Services by U.S. Pet-Owning Households, 1996, 2001, 2002 (in millions)
  • Table 2-5: Average Expenditures on Veterinary Services by U.S. Pet-Owning Households, 1991, 1996, 2001 (in dollars)
  • Table 2-6: Total Number of Visits to the Veterinarian by U.S. Pet-Owning Households, 1996 vs. 2001 (in millions) Humanization of Pets a Key Trend
  • Table 2-7: Pets as Family Members, 2002 (percent)
  • The Growing Pet Population
  • Table 2-8: U.S. Population of Cats and Dogs, 1981-2002 (in millions)
  • Table 2-9: Number of Cat and Dog Owners by U.S. Households and Share of Population, 1981-2002 (in millions)
  • Table 2-10: Percentage of U.S. Households That Own at Least One Pet, 2001 (percent)
  • The Aging Pet Population
  • Figure 2-3: Share of U.S. Dog Population by Age of Pet, 1996 vs. 2001 (percent)
  • Figure 2-4: Share of U.S. Cat Population by Age of Pet, 2001 (percent)
  • Most Growth Will Be Marketer Driven
  • Procter & Gamble’s Iams Unit Teams Up with VPI
  • Veterinarian Channel Prospects a Mixed Bag
  • Increased Demand from Company Benefits Programs
  • Consumer Reports Article Not Good News
  • Human Marketers Will Birth “New Demographic”
  • Figure 2-5: Projected U.S. Pet Insurance Market Revenues, 2002-2007 (in millions of dollars)

Market Projection

  • Market to Reach $667 Million by 2007
  • Table 2-11: Projected U.S. Pet Insurance Market Revenues, 2002-2007 (in millions of dollars)

Chapter 3: The Competitive Situation
Competitive Overview

  • VPI Out Front
  • Table 3-1: U.S. Marketers of Pet Insurance, 2002
  • Figure 3-1: Share of U.S. Pet Insurance Market Revenues by Company, 2002 (percent)
  • Figure 3-2: Share of U.S. Pet Insurance Market by Number of Active Policies, 2002 (percent)
  • Cross-Market Strategies
  • Targeting Pet Owners—Directly
  • Figure 3-3: Total National Consumer Advertising Expenditures by Veterinary Pet Insurance by Month, 2002 vs. 2003 (in thousands)
  • Table 3-2: Total National Consumer Advertising Expenditures on Pet Insurance, 2000-2003 (in thousands)
  • The Managed Care Contingent
  • Banfield the One to Watch
  • The BluePaws Story
  • PetAssure and AmeriPlan
  • The Canada Contingent
  • The U.K. Contingent

Competitive Profile: Hartville Group, Inc.
(Petsmarketing Insurance.com Agency, Inc.)

  • Company Overview
  • Figure 3-4: Hartville Group Pet Insurance Revenues, 2000-2002 (in thousands of dollars)
  • Corporate Culture a Financial/Veterinary Hybrid
  • Marketing Venues and the AKC Coup
  • On the Web
  • Public Relations

Competitive Profile: Midwest Pet Insurance Alliance

  • Company Overview
  • Corporate Culture and Marketing Approach
  • Public Relations

Competitive Profile: Pethealth Inc. (Canada)

  • Company Overview
  • Figure 3-5: Share of Pethealth Pet Insurance Policies* by Type, 2002 (percent)
  • Corporate Culture Based in Financial Markets
  • Marketing Strategy Based on Direct-to-Consumer Distribution Model
  • The Petfinder/ShelterCare Push
  • Big New Alliances
  • Goodbye Reader’s Digest; PETCO Next?
  • On the Web
  • Public Relations

Competitive Profile: Veterinary Pet Insurance Co. (VPI)

  • Company Overview
  • Figure 3-6: Veterinary Pet Insurance Revenues, 1998-2002 (in millions of dollars)
  • Corporate Culture and Marketing Based in Veterinary Medicine
  • Shifting Distribution
  • Table 3-3: National Consumer Advertising Expenditures by Veterinary Pet Insurance, 2000-2003 (in thousands)
  • Rallying Capital
  • Affinity Marketing
  • On the Web
  • Public Relations Target Consumers and Veterinary Professionals

Chapter 4: The Consumer
Introduction
The Pet Insurance Consumer

  • The Quintessential Purchaser
  • Table 4-1: Demographic Characteristics Favoring Purchasing of Pet Insurance, 2003 (U.S. adults)
  • Females Calling the Pet Care Shots
  • Top Veterinary Services and Products
  • Human Medical/Hospital Insurance Holder Demographics
  • Table 4-2: Demographic Characteristics Favoring Ownership of Human Medical/Hospital Insurance, 2002 (U.S. adults)
  • 65% of U.S. Consumers Obtain Medical/Hospital Insurance from Place of Work
  • Figure 4-1: Share of U.S. Medical/Hospital Insurance Policy Owners by Source of Policy, 2002 (U.S. adults)
  • Pet Owners Online
  • Table 4-3: Use/Influence of Internet: Cat and Dog Owners vs. All U.S. Adults (percent)

Consumer Focus: Pet Owners and Pet Care Product Purchasers

  • Household Ownership Rates at 32% for Dogs, 25% for Cats
  • Table 4-4: Household Penetration Rates for Selected Pet-Owning and Pet Care Product Classifications, 2000 vs. 2002 (U.S. adults)
  • Table 4-5: Household Populations for Selected Pet-Owning and Pet Care Product Classifications, 2000 vs. 2002 (U.S. adults)
  • AVMA Places Pet Ownership Rates Higher
  • Figure 4-2: Share of U.S. Households That Own at Least One Pet (percent)
  • Baby Boomers Out Front
  • Table 4-6a: Cat and Dog Ownership Indices: By Adult Age Bracket, 2002 (U.S. households)
  • Table 4-6b: Cat and Dog Ownership Indices: By Adult Age Bracket, 2002 (U.S. households)
  • Table 4-7a: Purchasing Indices for Selected Pet Care Product Classifications: By Adult Age Bracket, 2002 (U.S. households)
  • Table 4-7b: Purchasing Indices for Selected Pet Care Product Classifications: By Adult Age Bracket, 2002 (U.S. households)
  • Table 4-8: Cat and Dog Ownership Indices: By Household Size, 2002 (U.S. households)
  • Table 4-9: Purchasing Indices for Selected Pet Care Product Classifications: By Household Size, 2002 (U.S. households)
  • Pet-Owning Singles and Couples on the Ups
  • Table 4-10: Percentage of U.S. Households that Own Pets by Life Stage, 1991, 1996, 2001
  • The Aging U.S. Population
  • Table 4-11: Projected U.S. Population by Age Bracket, 2000-2010 (in thousands)
  • Table 4-12: U.S. Population Age 55 and Over, 2000-2010 (in thousands)
  • Health Attitudes and Concerns of U.S. Pet Owners
  • Table 4-13: Health Beliefs and Concerns: Cat and Dog Owners vs. All U.S. Adults (percent)
  • Table 4-14: Humans and Pet Well-Being, 2002 (percent)
  • South Is Top Region for Pet Ownership
  • Table 4-15: Cat and Dog Ownership Indices: By Region, 2002 (U.S. households)
  • Table 4-16: Purchasing Indices for Selected Pet Care Product Classifications: By Region, 2002 (U.S. households)
  • Minorities Underrepresented Among Pet Owners
  • Table 4-17: Cat and Dog Ownership Indices: By Race/Ethnicity, 2002 (U.S. households)
  • Table 4-18: Purchasing Indices for Selected Pet Care Product Classifications: By Race/Ethnicity, 2002 (U.S. households)
  • A High-Income Household Skew
  • Table 4-19a: Cat and Dog Ownership Indices: By Household Income Bracket, 2002 (U.S. households)
  • Table 4-19b: Cat and Dog Ownership Indices: By Household Income Bracket, 2002 (U.S. households)
  • Table 4-20a: Purchasing Indices for Selected Pet Care Product Classifications: By Household Income Bracket, 2002 (U.S. households)
  • Table 4-20b: Purchasing Indices for Selected Pet Care Product Classifications: By Household Income Bracket, 2002 (U.S. households)

Consumer Focus: Dog Owners

  • Sharper Demographics for Dog Ownership
  • Southern Skew for Dog Ownership
  • Older Slant for Dog Households
  • Figure 4-3: Household Penetration Rates for Selected Dog-Owning Classifications, 2002 (U.S. adults)
  • Table 4-21: Selected High Consumer Indices for Households with Pet Dogs, 2002 (U.S. adults)
  • Table 4-22: Demographic Characteristics Favoring Ownership of One Dog, 2002 (U.S. adults)
  • Table 4-23: Demographic Characteristics Favoring Ownership of Two Dogs, 2002 (U.S. adults)
  • Table 4-24: Demographic Characteristics Favoring Ownership of Three Dogs, 2002 (U.S. adults)
  • Table 4-25: Demographic Characteristics Favoring Ownership of Four or More Dogs, 2002 (U.S. adults)

Consumer Focus: Cat Owners

  • Leading Indicators for Cat Ownership
  • 45-54 Is Top Bracket for Multiple-Cat Households
  • Moderate Incomes for Multiple-Cat Households
  • Figure 4-4: Household Penetration Rates for Selected Cat-Owning Classifications, 2002 (U.S. adults)
  • Table 4-26: Selected High Consumer Indices for Households with Pet Cats, 2002 (U.S. adults)
  • Table 4-27: Demographic Characteristics Favoring Ownership of One Cat, 2002 (U.S. adults)
  • Table 4-28: Demographic Characteristics Favoring Ownership of Two Cats, 2002 (U.S. adults)
  • Table 4-29: Demographic Characteristics Favoring Ownership of Three Cats, 2002 (U.S. adults)
  • Table 4-30: Demographic Characteristics Favoring Ownership of Four or More Cats, 2002 (U.S. adults)

Consumer Focus: Health Products for Cats and Dogs

  • 30% of Households Use Flea and Tick Care Products
  • Flea/Tick-Control Products: Veterinarian-Dispensed vs. Retail Brands
  • Heartworm-Control Products: Cats vs. Dogs
  • Minority Skew to Pet Supplements
  • Figure 4-5: Household Penetration Rates for Selected Treatment Products for Cats and Dogs, 2000 vs. 2002 (U.S. adults)
  • Table 4-31: Demographic Characteristics Favoring Purchase of Flea and Tick Care Products, 2002 (U.S. adults)
  • Table 4-32: Demographic Characteristics Favoring Purchase of Flea and Tick Care Products: For Preventative Use, 2002 (U.S. adults)
  • Table 4-33: Demographic Characteristics Favoring Purchase of Flea and Tick Care Products: For Treatment Use, 2002 (U.S. adults)
  • Table 4-34: Demographic Characteristics Favoring Purchase of Hartz Flea and Tick Care Products, 2002 (U.S. adults)
  • Table 4-35: Demographic Characteristics Favoring Purchase of Advantage Flea and Tick Care Products, 2002 (U.S. adults)
  • Table 4-36: Demographic Characteristics Favoring Purchase of Frontline Flea and Tick Care Products, 2002 (U.S. adults)
  • Table 4-37: Demographic Characteristics Favoring Purchase of Sergeant’s Flea and Tick Care Products, 2002 (U.S. adults)
  • Table 4-38: Demographic Characteristics Favoring Purchase of Heartworm-Control Products for Cats, 2002 (U.S. adults)
  • Table 4-39: Demographic Characteristics Favoring Purchase of Heartworm-Control Products for Dogs, 2002 (U.S. adults)
  • Table 4-40: Demographic Characteristics Favoring Purchase of Pet Food Supplements/Vitamins for Cats or Dogs, 2002 (U.S. adults)
  • Figure 4-6: Purchasing of Pet Food Supplements/Vitamins for Cats or Dogs: By Adult Age Bracket, 2002 (U.S. Adults)
  • Figure 4-7: Purchasing of Pet Food Supplements/Vitamins for Cats or Dogs: By Household Income Bracket, 2002 (U.S. Adults)

Chapter 5: Looking Ahead
Trends and Opportunities

  • The PETsMART/PETCO Probability
  • Entrants from Retail, Financial, and Foreign Camps
  • Increased Competition Will Mandate Product Differentiation
  • Table 5-1: Pets and Travel, 2002 (percent)
  • Dollars, Sense, and Affinity Alliances
  • Incentives and Agents
  • Getting Serious Online
  • Equine Insurance Market Cross Over

Appendix: Addresses of Selected Marketers


Abstract

The overall U.S. insurance business needs all the help it can get given September 11 and the state of the economy. Why, then, are major companies like Blue Cross, Allstate, and State Farm apparently snubbing this burgeoning niche? Market Trends: The U.S. Market for Pet Insurance answers this question and pinpoints opportunities in this underexploited segment of the overall U.S. insurance market.

Currently valued at $88 million and chalking up growth of at least 45% annually, the pet insurance market clearly is a diamond in the rough; there are more than 136 million dogs and cats in this country—but less than 1% of them have insurance (versus 14% of dogs and 5% of cats in the U.K.).

A shift in the traditional pet insurance marketing paradigm from back-end (i.e., through veterinarian offices) to direct-to-consumer, the growing range of costlier healthcare options and prescription drugs for pets, and the pets-as-family trend assure the future of this market, which is currently controlled by just three companies, Veterinary Pet Insurance, Pethealth and Hartville.

It is likely, however, that mainstream insurance companies with much deeper pockets will be the ones to bring pet insurance into the national spotlight, hurrying it toward the billion-dollar mark in the next five years with nationally advertised adjunct programs.

Introducing Market Trends
Market Trends is the latest product line from Packaged Facts. These timely, compact reports offer insight and analysis into new product trends, demographic shifts, and consumer behaviors that affect the food, beverage and consumer goods industries.


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