naphia state of industry report avalon
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tate of Industry ReportTRANSCRIPT
North American Pet Health Insurance Industry
Industry Results for Years 2009 to 2013
Agenda
Section 1: Introduction and Methodology Section 2: Gross Written Premium Section 3: Number of Pets Section 4: Average Premiums Section 5: Future Outlook
Introduction & Methodology
The North American Pet Health Insurance Market Survey was established 3 years ago, with data going back to 2008
Today’s presentation is a summary of the key findings of the 2014 North American Pet Health Insurance Industry Report with industry results for years 2009 through 2013
Objectives of the Report:
Create a credible data-driven report that demonstrates to the marketplace and the pet health community in North America that the pet health insurance industry is a solid, growing insurance market
Monitor the industry’s performance and growth in key areas Highlight any emerging trends
The data was collected by means of a survey questionnaire/data call spreadsheet completed by
the NAPHIA members.
The data collected was thoroughly reviewed by Avalon. Reasonableness tests were conducted. Follow-ups with participants were done as necessary. Quality Control processes were put in place and aggregate results were compiled.
Section 1
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Products monitored in the report
Accident Only Foreign body ingestion, lacerations, motor vehicle accident,
ligament tears, poisoning, etc.
Accident & Illness Accident benefits plus illnesses such as cancer, infections,
digestive problems, etc.
Insurance with Embedded Wellness Comprehensive plans that may include vaccinations, early screening diagnostics, consultations for proper nutrition,
dental care, etc.
Endorsements Riders such as wellness or cancer endorsements.
Section 1 Introduction & Methodology
Section 1 Introduction & Methodology
NAPHIA Members
Section 2 Gross Written Premium
Section 2 Gross Written Premium
2009 2010 2011 2012 2013
$297.1 M $339.3 M
$375.3 M $425.2 M
$487.4 M (*)
• 14.6% increase from 2012 to 2013 (*)
• 13.3% increase from 2011 to 2012
• 10.6% increase from 2010 to 2011
• 14.2% increase from 2009 to 2010
In-Force GWP (2009-2013)
The industry has experienced double-digit increases since 2009 (average annual growth rate of 13.2% *).
The North American market is estimated to be approximately $595 million.
(*) Results for 2013 include two new members (their data is not included in 2009-2012)
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Dogs • 14.8% increase from 2012 to 2013 (*)
• 13.4% increase from 2011 to 2012
• 10.8% increase from 2010 to 2011
• 14.5% increase from 2009 to 2010
In-Force GWP - Cats vs. Dogs (2009-2013)
2009 2010 2011 2012 2013
$32.8 M $36.7 M $40.0 M $45.1 M $51.2 M
(*)
$264.4 M $302.6 M
$335.3 M
$380.1 M
$436.2 M (*)
Cats • 13.5% increase from 2012 to 2013 (*)
• 12.7% increase from 2011 to 2012
• 9.0% increase from 2010 to 2011
• 11.8% increase from 2009 to 2010
Dogs represented approximately 90% of In-Force Gross Written Premium in 2013, for a total of $436.2 million.
Section 2 Gross Written Premium
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(*) Results for 2013 include two new members (their data is not included in 2009-2012)
Accident Only; $4.2 M 0.9%
Accident & Illness; $396.0 M
81.2%
Insurance with Embedded Wellness; $14.5 M
3.0%
Endorsements; $72.7 M 14.9%
Accident & Illness represents the biggest share, with 81.2% of total gross written premium in 2013.
Note: Endorsements include Wellness and Cancer riders.
In-Force GWP - Per Product (2013)
Section 2 Gross Written Premium
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Gross Written Premium
In-Force GWP - Per Product (2009-2013)
2009 2010 2011 2012
Accident Only $1.54 M $2.50 M $3.00 M $3.65 M
Accident & Illness $193.0 M $229.0 M $266.0 M $325.2 M
Insurance with Embedded Wellness $33.8 M $35.4 M $34.6 M $24.0 M
Endorsements $68.9 M $72.4 M $71.8 M $72.3 M
TOTAL $297.1 M $339.3 M $375.3 M $425.2 M
2013 (*)
$4.21 M
$396.0 M
$14.5 M
$72.7 M
$487.4 M
% change 2009-2013
+173%
+105%
-57%
+5.5%
+64%
Section 2
10
(*) Results for 2013 include two new members (their data is not included in 2009-2012)
In-Force GWP - Per Product (2009-2013)
$1.5 M $2.5 M $3.0 M $3.7 M $4.2 M
$33.8 M $35.4 M $34.6 M $24.0 M $14.5 M
$68.9 M $72.4 M $71.8 M $72.3 M $72.7 M
$193.0 M
$229.0 M
$266.0 M
$325.2 M
$396.0 M
2009 2010 2011 2012 2013 (*)
Accident Only
Insurance withEmbeddedWellness
Endorsements
Accident & Illness
Section 2 Gross Written Premium
11
(*) Results for 2013 include two new members (their data is not included in 2009-2012)
• 17.6% increase from 2012 to 2013 (*)
• 1.8% increase from 2011 to 2012
• 4.1% increase from 2010 to 2011
• 10.4% increase from 2009 to 2010
GWP - New Business Added (2009-2013)
2009 2010 2011 2012 2013
$100.0 M $110.4 M $114.9 M $117.0 M
$137.6 M (*)
Section 2 Gross Written Premium
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(*) Results for 2013 include two new members (their data is not included in 2009-2012)
GWP - New Business Added, Per Product (2009-2013)
2009 2010 2011 2012
Accident Only $0.69 M $1.93 M $2.03 M $1.74 M
Accident & Illness $55.6 M $67.1 M $77.2 M $90.7 M
Insurance with Embedded Wellness $12.7 M $11.1 M $9.7 M $5.9 M
Endorsements $31.1 M $30.2 M $26.0 M $18.7 M
Total $100.0 M $110.4 M $114.9 M $117.0 M
2013 (*)
$2.11 M
$114.5 M
$3.2 M
$17.8 M
$137.6 M
Section 2
13
(*) Results for 2013 include two new members (their data is not included in 2009-2012)
Gross Written Premium
GWP - Ratio of New Business Added to In-Force GWP (2009-2013)
2009 2010 2011 2012
New Business Added $100.0 M $110.4 M $114.9 M $117.0 M
Gross Written Premium $297.1 M $339.3 M $375.3 M $425.2 M
Ratio (%) 33.7% 32.5% 30.6% 27.5%
2013 (*)
$137.6 M
$487.4 M
28.2%
Section 2
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(*) Results for 2013 include two new members (their data is not included in 2009-2012)
Gross Written Premium
Net Premium Growth (2009-2013)
2009 2010 2011 2012
In-Force Premium Volume (BOY)
$261.5 M (Dec. 31, 2008)
$297.1 M (Dec. 31, 2009)
$339.3 M (Dec. 31, 2010)
$375.4 M (Dec. 31, 2011)
New Business Added $100.0 M $110.4 M $114.9 M $117.0 M
In-Force Premium Volume (EOY)
$297.1 M (Dec. 31, 2009)
$339.3 M (Dec. 31, 2010)
$375.4 M (Dec. 31, 2011)
$425.2 M (Dec. 31, 2012)
Net Premium Loss (1) $64.4 M $68.2 M $78.8 M $67.2 M
Net Premium Loss (%) (Net Premium Loss / (In-Force Volume BOY + New Business
Added))
17.8% 16.7% 17.3% 13.6%
(1) Net Premium Loss represents the difference between the End Of Year (EOY) result and “Beginning Of Year (BOY) plus New Business Added”.
2013 (*)
$425.2 M (Dec. 31, 2012)
$137.6 M
$487.4 M (Dec. 31, 2013)
$75.4 M
13.4%
Section 2
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(*) Results for 2013 include two new members (their data is not included in 2009-2012)
Gross Written Premium
Section 3 Number of Pets
Number of Pets
2009 2010 2011 2012 2013
731,404 796,713
844,239 904,694
1,033,983 (*)
• 14.3% increase from 2012 to 2013 (*)
• 7.2% increase from 2011 to 2012
• 6.0% increase from 2010 to 2011
• 8.9% increase from 2009 to 2010
Total Insured Pets (2009-2013)
Section 3
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(*) Results for 2013 include two new members (their data is not included in 2009-2012)
Number of Pets
Breakdown: Total Insured Cats vs. Dogs (2009-2013)
2009 2010 2011 2012 2013
112,649 121,425 127,682 136,432
157,542 (*)
618,755 675,288
716,557
768,262
876,441 (*)
Section 3
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(*) Results for 2013 include two new members (their data is not included in 2009-2012)
Dogs
Cats
Number of Pets Section 3
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Results from 2013-14 National Pet Owners Survey (APPA): The APPA National Pet Owners Survey found that pet ownership in the U.S. is at a
record. The survey indicated that pet ownership among all US households is 68%, representing 82.5 million pet-owning households in 2012 (an all-time high).
Dog ownership rose to 56.7 million households, and cat ownership grew to 45.3 million.
These gains in dog- and cat-owning households indicate that the total number of these pets also rose in the U.S. to a total of 179 million: 83.3 million dogs 95.6 million cats
Number of Pets
Accident Only; 31,727 3.1%
Accident & Illness; 988,338 95.6%
Insurance with Embedded Wellness;
13,918 1.3%
• The average age of Insured Pets in 2013 was 4.57 years (was 4.04 in 2012)
• The average age of New Pets Added in 2013 was 2.73 years (was 2.79 in 2012)
Total Insured Pets - Per Product (2013)
Section 3
20
Number of Pets
Insured Pets Per Product (2009-2013)
2009 2010 2011 2012
Accident Only 12,557 19,678 23,697 27,290
Accident & Illness 664,768 726,935 771,973 850,672
Insurance with Embedded Wellness 54,079 50,100 48,569 26,732
TOTAL 731,404 796,713 844,239 904,694
2013 (*)
31,727
988,338
13,918
1,033,983
% change 2009-2013
+153%
+48.7%
-74.3%
+41.4%
Section 3
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(*) Results for 2013 include two new members (their data is not included in 2009-2012)
Number of Pets
2009 2010 2011 2012 2013
251,791 255,728 253,003
257,721
321,373 (*)
• 24.7% increase from 2012 to 2013 (*)
• 1.9% increase from 2011 to 2012
• 1.1% decrease from 2010 to 2011
• 1.6% increase from 2009 to 2010
New Insured Pets Added Each Year (2009-2013)
Section 3
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(*) Results for 2013 include two new members (their data is not included in 2009-2012)
Number of Pets
Breakdown by Pet : New Pets Added (2009-2013)
2009 2010 2011 2012 2013
41,627 41,396 41,597 43,095
55,783 (*)
210,164 214,332 211,406
214,626
265,590 (*)
Section 3
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(*) Results for 2013 include two new members (their data is not included in 2009-2012)
Cats
Dogs
Number of Pets
Net Growth - Number of Insured Pets (2009-2013)
2009 2010 2011 2012
Total Insured Pets (BOY) 677,585 (Dec. 31, 2008)
731,404 (Dec. 31, 2009)
796,713 (Dec. 31, 2010)
844,239 (Dec. 31, 2011)
New Pets Added during year 251,791 255,728 253,003 257,721
Total Insured Pets (EOY) 731,404 (Dec. 31, 2009)
796,713 (Dec. 31, 2010)
844,239 (Dec. 31, 2011)
904,694 (Dec. 31, 2012)
Net Cancellations 197,972 190,419 205,477 197,266
Attrition (% of “Total Insured Pets BOY plus
“New Pets Added”) 21.3% 19.3% 19.6% 17.9%
2013 (*)
904,694 (Dec. 31, 2012)
321,373
1,033,383 (Dec. 31, 2013)
192,684
15.7%
Attrition Rate: There are various methods of calculating the attrition rate and each company may have their own calculation method. For the purposes of this study, the attrition rate is calculated as Net Cancellations / (Total Insured Pets BOY + New Pets Added).
The industry achieved an average monthly attrition rate of approximately 1.3% in 2013 , which also means the
industry achieved 98.7% monthly retention.
Section 3
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(*) Results for 2013 include two new members (their data is not included in 2009-2012)
Section 4 Average Premiums
Average Premiums
Average Premiums - Per Insured Pet (straight average)
Section 4
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(*) Results for 2013 include two new members (their data is not included in 2009-2012)
$138.03 $137.29 $143.58 $150.53 $161.92
$316.66 $343.54 $369.06 $407.37 $407.37
$706.64
$799.14 $820.67
$1,018.47 $1,110.50
2009 2010 2011 2012 2013
Accident Only
Accident & Illness
Insurance withEmbedded Wellness
Section 5 Future Outlook
The Survey questions were designed to gather your opinions on industry issues shared by your peers (based on all respondents)
All respondents agree or strongly agree with the statement « The
current economic climate is good for pet insurance »
9 respondents agree or strongly agree with the statement « We will see greater competition for Pet insurance within the next 12 months »
9 respondents agree or strongly agree with the statement « As competition intensifies, Pet insurance products/services will help differentiate among competing providers »
All respondents agree or strongly agree that « Consumers compare Pet insurance options based on benefits/services »
8 respondents agree or strongly agree that « Consumers compare Pet insurance options based on price »
Section 5 Future Outlook
Drivers most likely to affect premium / business growth in the next year:
Ranked 1st by:
Growth in New Pets Insured 5 companies
Increase in Premium Rates 2 companies
New Products 2 companies
Use of Additional Distribution Channels
1 company
Section 5 Future Outlook
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Main concerns in the industry for the next year:
Ranked 1st by:
Sales / Growth 6 companies
Consumer Satisfaction 2 companies
Regulation 1 company
Pricing 1 company
Section 5 Future Outlook
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Recap
The participating NAPHIA members combined for a total premium volume of approximately $487.4 million in 2013.
From 2009 to 2013, the average annual growth rate in GWP was approximately 13.2% (including the 2 new participants in 2013)
Based on available public reports and information, the North American market was estimated at approximately $595 million in 2013.
A total of just over 1 Million Pets insured at year-end 2013
• Average annual growth rate of 9% from 2009 to 2013 (including the new participants in 2013)
• Approximately 85% of insured pets are dogs • Approx. 320,000 new pets added in 2013 (including the new participants in 2013);
double-digit increase in 2013 over 2012 for same sample (up from less than 2% year over year from 2009)
Accident & Illness is the top selling plan in North America with $397.6 million GWP in 2013, representing 81.3% of the total premium volume in 2013.
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