Have you bought insurance for your pet?

On a night in August, near Kerry City in Pudong, the subway station exit was much livelier than usual. Young people shuttle through the subway station, pulling suitcases of all sizes and carrying brightly colored bags with cartoon images of cats and dogs printed on them.

They are the last group of visitors to the 25th Asian Pet Expo, with bags filled with food, drinks, toys, and supplies they bought for the furry kids. In addition to tangible consumption, the tentacles of the pet economy are also extending to intangible services.

At this year's Asian Pet Expo, Zhongan Insurance and Ant Insurance jointly released the "2023 Pet Digital Insurance Development Trend Insight White Paper" to the public. According to the white paper data, the global pet insurance market size reached 90.846 billion yuan in 2022, with a compound annual growth rate of 16.45%.

The participating entities in the pet market are gradually becoming more diverse. Although the overall pet insurance market in China is still in its early stages of development, with a penetration rate of less than 1%, this is undoubtedly a blue ocean.

Mainly focused on pet medical insurance

Currently, Sweden has the most developed pet insurance industry, with a high insurance coverage rate of 49%. However, in 1924, when Swedes issued their first pet insurance policy for a pet dog, no one would have expected that the global pet insurance market would reach 90.846 billion yuan in a hundred years.

Pet insurance is a commercial insurance that belongs to family property insurance or liability insurance. The most mainstream product on the market currently is pet medical insurance, similar to commercial medical insurance for humans, covering the treatment costs and compensation for sick or injured pets. The premium price of pet medical insurance ranges from a few hundred yuan to thousands of yuan, with corresponding annual reimbursement limits ranging from several thousand yuan to tens of thousands of yuan. Taking the upgraded version of pet medical insurance sold by Zhongan Insurance on the Ant Insurance platform as an example, the monthly premium is 33.25 yuan, and the annual reimbursement limit is 15000 yuan. Designated hospitals can reimburse up to 70% of medical expenses, while non designated hospitals can reimburse up to 40%.

"It always gets sick and costs three to four thousand yuan each time," said Miss Yang. She has two dogs at home and started buying pet medical insurance for them two years ago. One of them had gastroenteritis two months ago, and the treatment cost about 3000 yuan. Later, two-thirds of it was reimbursed.

Mr. Li has bought insurance for his family and pet cat. In his opinion, buying insurance is "using current money to manage unknown risks.". Many pet owners state that medical expenses are a significant expense in the process of raising pets. According to data from Meituan, the demand for "24-hour pet doctors" has increased significantly since the beginning of this year, with search volume increasing by 150% year-on-year. According to the white paper, gastrointestinal diseases and urinary system diseases are among the most common diseases among cats and dogs. In 2023, pet owners spent an average of 2390 yuan and 2786 yuan on a single cat or dog for medical treatment.

In this situation, it is not surprising that the premium scale of pet medical insurance accounts for up to 90%. The head of pet insurance business at Zhongan Insurance stated that the premium scale of Zhongan Pet Insurance reached 200 million yuan in the first half of this year, with a premium scale of over 180 million yuan for pet medical insurance. But the process of promoting medical insurance has not been smooth sailing.

"Due to the lack of standardization in pet disease management and pet diagnosis and treatment compared to human standards, this poses great challenges to insurance pricing and claims." The person in charge of Ping An Property and Casualty Insurance's pet insurance stated that currently, there is still a significant price difference in drugs and veterinary diagnosis and treatment in different regions of the pet medical field, and there is no standard pricing. The diagnosis and treatment environment and level of pet hospitals and doctors in different regions are also uneven, and there is no concept of internal and external medication in pet treatment, similar to human medical insurance, which increases the risks of pet overtreatment and overuse.

Consumers expect future pet insurance to cover more services, such as routine deworming, vaccines, and medical examinations. "There are too many things that beginner pet owners don't understand, including daily at home, what do some cat behaviors mean? How should we choose the nutritional combination of daily cat food and health products? We don't really understand, so we can only go to social media to see others' experiences." Mr. Li said.

Developing fast lanes

Nowadays, pet insurance products almost cover the entire life cycle of pets. In addition to pet medical insurance, third-party liability insurance is also a highly recognized product. In addition, there are accident insurance such as pet anesthesia accidental death insurance and pet consignment insurance. But just 10 years ago, the situation was completely different.

In 2004, Huatai Insurance launched the additional insurance of the "Xiaokang Family Comprehensive Insurance", which included pet liability in the coverage and stipulated that dogs can be compensated for biting people. This was the first pet insurance in China. In 2014, PICC China Property and Casualty Insurance, China Animal Husbandry Association, and Beijing Chongxun Technology and Cultural Development Co., Ltd. jointly launched Chonglebao, which can reimburse the medical expenses of pets for medical treatment, breaking the form of "the insurer does not protect pets". However, at that time, insurance was mostly sold offline, and pet owners had a much lower willingness to purchase than they do now.

Later, the Internet business soared, the online economy continued to climb, and the pet economic ecosystem continued to improve. For two consecutive years in 2021 and 2022, Ant Insurance's pet insurance platform maintained a growth rate of over 80%.

"Previously, traditional insurance companies had attempted some pet insurance, but at that time, the technical means were incomplete, and the standards and infrastructure for pet medical care were relatively weak. If a pet fell ill, they had to go to animal husbandry stations and bureaus, so there were more restrictions on pet insurance. The head of pet insurance business at Zhong'an Insurance believes that the application and upgrading of technologies such as pet nose tattoo technology can be seen as a sign that pet insurance has entered the fast lane.".

In the view of the person in charge of Ping An Property and Casualty Insurance's pet insurance, the domestic pet industry is still in its early stages. However, with the increase in the number of pets in China and the increasing attention and importance of pet owners towards pet health, pet insurance will definitely adapt to market choices and occupy a place in the insurance market.

Pet owners upgrading their consumption

From niche products to the public eye, the booming fast lane of pet insurance is actually built by a group of pet owners who are upgrading their consumption.

According to data from international consulting firm Frost Sullivan, it is expected that the number of pets in China will further increase to 446 million by 2024. The Blue Book of China's Pet Industry shows that the scale of China's pet economy industry will exceed 210 billion yuan in 2022.

These numbers are a microcosm of the booming pet economy, and in this blue ocean, young people are undoubtedly the main force. According to Meituan data, the proportion of pet owners born in 1995 is the highest, reaching 37%. In the field of pet insurance, the post-90s and post-95s have also become the "main circle" of pet insurance policyholders, accounting for 60% of the total insured population.

"One day when I woke up and saw Xiaowei by my side, I suddenly realized that with it, I wouldn't be alone at home anymore." Miss An is 27 years old, and Xiaowei is a cat she adopted from a pet hospital. She started buying pet medical insurance for Xiaowei a year ago. I bought items such as cat strips, freeze-dried cats, wet food, canned food, and dental powder for Xiaowei at the Asian Pet Exhibition this time. After adopting Xiaowei, most of the photos in Miss An's phone album were of cats, which made her feel very relaxed.

Miss An purchased products for Xiaowei at the Asian Pet Exhibition.

In the past, pets may have undertaken certain specific "functions", such as keeping dogs to keep watch over the house and cats to catch mice. Nowadays, people's lives naturally do not require an animal to bear such responsibilities, and pets no longer bear the expectation of "completing work". More people just want a kind of companionship. Research data shows that over 90% of pet owners choose to keep pets out of emotional motivation. "Now they are the masters," said Xiao Yu, who had a a Border Collie at home, smiling.

After being with you for a long time, pets are no longer just pets. According to a white paper survey, 86% of people believe that pets are friends, family, and children, and they are willing to pay for their pets' health and happiness.

Humanized pet rearing has given rise to refined and scientific ways of caring. "Health and high-end" have become new keywords in the pet consumption market.

Just taking the act of feeding as an example, in the past it may have been enough leftover food to feed, but now pet owners are more concerned about how to feed scientifically. According to data from JD Supermarket, the market share of high meat content roasted cat food has increased from 43% in 2022 to 80% in 2023, with over 88% of the market share. The high-end meat source has become a new growth direction in the pet feeding market.

The industrial chain is also extending further away. In Shanghai, pet friendly labels are gradually appearing in some public places such as restaurants, shopping malls, and parks. The related service projects are innovating, including a series of upstream products and downstream services such as breeding, food, supplies, training, foster care, medical care, beauty, photography, health care, insurance, pet parks, and pet funerals, which together constitute the entire pet economy industry chain, and the consumption level is gradually improving.

The head of pet insurance business at Zhongan Insurance stated that as of the end of 2022, the premium and accident rate of pet insurance in Shanghai ranked second in the country. With the continuous improvement of consumer level, there is still a lot of room for imagination in the fields where finance can innovate, cover, and serve.