It’s no secret that the millennial generation’s lifestyle habits are having a major impact on the economy. They’re digital natives. They’re putting off marriage and children. They’re choosing to rent, not buy their homes.
And perhaps most significantly, they’re a generation saddled with student debt in a job market that offers little opportunity to recoup their losses. In other words, financial peace of mind is in short supply.
All of these factors have contributed to a rise in the renters' insurance market, but there’s another insurance product nipping at its heels: pet insurance.
The fact is, the demographic and economic forces driving renters insurance are many of the same things propelling pet insurance. Will these factors push pet insurance into a similar velocity of growth?
Consider how the two markets mirror each other:
|Lifestyle drivers
Millennials are renting longer in large part because they are delaying marriage and children. And instead of starting families, they’re getting pets. In fact, millennials are now the primary pet-owning demographic in the U.S., according to the American Pet Products Association.
|Underpenetrated markets
When it was discovered that only 40% of renters carry insurance, according to the Insurance Information Institute, providers turned to millennials, raising awareness about the degree to which they undervalue their belongings. They’re also underestimating the rising cost of veterinary care. Advancements in veterinary medicine over the past few decades have pushed the cost of care steadily higher. According to 2016 Petplan pet insurance claims data, every six seconds a pet owner is handed a veterinary bill for more than $3,000. Yet fewer than 1% of U.S. pets are insured, according to the North American Pet Health Insurance Association.
Related: 10 ways to avoid pet insurance claims this summer
|Plugged-in platforms
Technology is king in the millennial generation — and an area that can make or break the buying process for them. Renters insurance start-ups are attracting policyholders by designing a digital experience that provides good service, in less time and at a lower cost than big-name counterparts. Pet insurance providers are stepping up to the plate with apps and other digital platforms that nurse prospects from quote to purchase, allowing them to customize their coverage and book a policy entirely online.
|Low cost, big payoff
One of the biggest barriers to purchase for both rental insurance and pet insurance is the perceived added expense. But in reality, both insurance products are relatively inexpensive — and sometimes even a savings. According to ValuePenguin, the average cost of renters insurance is $187 per year in the U.S., yet a policy could cover thousands of dollars’ worth of belongings. Similarly, the average cost of a Petplan pet insurance policy is just $400 annually, yet it can provide up to an unlimited amount of annual coverage.
It remains to be seen whether pet insurance will follow a similar trajectory as renters insurance, but the similarities in both markets suggest a tipping point is imminent. By appealing to millennial prospects using modern design and innovative distribution, pet insurance stands to fetch a significant share of the marketplace.
Chris Ashton is co-founder and co-CEO of Petplan pet insurance. He can be reached at [email protected].
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
