The North American revenues of pet insurance reached $354 million in 2009, up 14% from $310 million in 2008, as the market continues to chart what is forecast to be double–digit annual increases through the next five years, according to Pet Insurance in North America, 4th Edition by market research publisher Packaged Facts.
Sales of pet insurance in the United States totaled $303 million in 2009, up 16% from $262 million in 2008, when sales rose 27%. Pet insurance sales in Canada accounted for the remaining $51 million, up 8% from $48 million. Packaged Facts estimates the number of pets insured in North America at more than 1 million as of 2009, with the U.S. accounting for more than 80% of the North American total.
The report uses gross written premiums (GWPs) as the main measure for calculating market size. Also referred to as "earned premiums" or "annualized premiums," GWPs are the revenues expected to be received over the life of the contract when a non–life insurance company closes a contract to provide insurance against loss.
Given the slow but steady economic recovery and high level of competitive activity, Packaged Facts predicts that growth in GWPs will climb back to 20% in 2010, and that the annual increase will average at this level through 2014. By this measure, North American GWPs will reach $881 million in 2014, representing a compound annual growth rate of 20%.
Even with the impressive projections, the recession remains an ongoing factor in the market’s future with consumers unwaveringly cautious about their spending habits. Results of Packaged Facts’ September 2010 consumer survey reveal that among those who did not have pet insurance, 42% cited "don’t want additional bill" as the reason and 37% said they "don’t want to spend the money for it." With economic recovery slow at best, this reticence is unlikely to change overnight, suggesting marketers still face significant hurdles in communicating the value of pet insurance to a wider audience.
"Despite the currently high level of market dynamism, our projection represents significant moderation over the 25%-35% rates we predicted in previous editions due to the lingering effects of the recession," says David Lummis, senior pet market analyst for Packaged Facts. "That said, the level of competitive activity is at an all-time high, and with so many irons in the fire we are not ruling out a higher growth rate. However, such growth will depend on the ability of marketers to move from what appears to be a stage of market cannibalization to one of more uniform growth via an expanded overall consumer base."
The report reveals that one possible catalyst to higher–level growth would be the entry into the market of another mega-retailer, such as PetSmart—via its Banfield units—or Walmart, which is reportedly planning a Canadian launch as a Western Financial white label.[Source: Pet Insurance in North America, 4th Edition. Packaged Facts. 26 Oct. 2010. Web. 17 Nov. 2010.]