Blue Ocean Pet Insurance Market... Grown 14 Times in 3 Years

Pet stock photo [Image source=Yonhap News]

[Asia Economy Reporter Changhwan Lee] The domestic pet insurance market is rapidly growing. With insurance companies actively launching products and the government promising policy support, the growth potential is expected to increase further.

According to the insurance industry on the 16th, the size of the domestic pet insurance market reached a record high of 21.7 billion KRW in gross written premiums last year. The market, which was only 1.5 billion KRW in 2018, has grown 14.5 times in just three years. The number of insurance contracts also increased 6.2 times, from 8,025 in 2018 to 49,766 last year.

The rapid growth of the pet insurance market is due to the increasing number of pet owners. According to the Ministry of Agriculture, Food and Rural Affairs, as of 2020, pet-owning households accounted for 27.7% of all households in Korea, up steadily from 17.4% in 2010. As the number of pets increases, the burden of veterinary expenses grows, leading more people to seek pet insurance.

As the market expands, insurance companies are continuously launching pet insurance products with enhanced coverage. The domestic pet insurance market is led by major non-life insurers such as Meritz Fire & Marine Insurance, Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, and DB Insurance.

Samsung Fire & Marine Insurance’s pet insurance product "Wipungdaengdaeng," launched last September, has sold over 1,300 policies within a week, gaining great popularity. Its long renewal cycle and coverage up to a maximum age of 20 are cited as reasons for its popularity.

Hyundai Marine & Fire Insurance also launched "Healthy Pet Care Insurance" this month, increasing the compensation limit for veterinary treatment costs from about 150,000 KRW per day to 300,000 KRW. Meritz Fire & Marine Insurance, the industry leader in pet insurance, is also upgrading its existing products to expand its market share.

The insurance industry expects the pet insurance market to record another all-time high this year, following last year. This is due to increased product sales and government support.

After President Yoon Suk-yeol included the activation of pet insurance among the 110 national policy tasks, a pet insurance activation task force (TF) involving the Financial Services Commission, the Ministry of Agriculture, Food and Rural Affairs, and the Korea Insurance Research Institute has been formed and is active.

Recently, the Financial Services Commission eased regulations at the Financial Regulation Innovation Meeting to allow insurance companies to establish specialized insurance subsidiaries focused on areas such as pet insurance, as part of these efforts.

However, the industry points out that for the pet insurance market to properly grow, chronic issues such as non-standardized medical fees and pet identification must be resolved.

When pets are sick, owners visit veterinary hospitals, but there is a large disparity in medical fees between hospitals, and there is no proper way to compare prices, making it difficult for insurance companies to estimate the medical expenses they will cover under pet insurance.

Additionally, if a microchip that can verify a pet’s identity is not implanted, visual identification is difficult and age determination is challenging, leading to significant information asymmetry between insurance companies and policyholders.

The government introduced a nationwide pet registration system in 2013 to protect animals and prevent abandonment, but the actual number of registered dogs is estimated to be only around 20-30%. Because of this, domestic pet insurance sales were even suspended in 2010.

An insurance industry official said, "While insurance companies have high interest in pet insurance, institutional foundations such as standardized veterinary fees, absence of treatment codes, and non-issuance of medical records are insufficient. Due to the lack of statistics and data related to medical expenses, it is difficult to calculate premiums and manage loss ratios, which somewhat burdens product development and market expansion."