Being ready to look after your four-legged friend when they fall ill or get injured is a crucial part of being a responsible pet parent. There are several ways to ensure you’re financially prepared for pet health emergencies and if you have pet insurance, it’s essential to understand what factors impact your premium and why they typically rise each year.

Like all general insurance products, pet insurance is risk-rated. This means that several factors affect the risk profile, and consequently, the pricing of your policy. From your location to your product coverage and claims history, many variables influence pricing. In this article, we’ll focus on the primary factors: your pet’s age, breed, and advancements in veterinary medicine that typically lead to premiums rising.

Why Do Pet Insurance Premiums Increase?

Your Pet’s Age and Breed

Pets age faster than humans – one human year is roughly equivalent to about 5.3 dog years. This accelerated aging process means pets are more likely to need veterinary care as they get older. Over just 12 months, there can be a significant change in your pet’s health risk profile. Older pets are more prone to conditions like arthritis and cancer, which come with higher medical costs.

The breed of your pet also plays a role in premium pricing. Different breeds are predisposed to specific health issues. For example, brachycephalic (or “brachy”) breeds like French Bulldogs, Pugs, or Boxers often suffer from Brachycephalic Obstructive Airway Syndrome (BOAS). This condition affects their respiratory system and requires significant medical treatment. Breed-specific conditions can appear even at a young age – PetSure claims data shows that BOAS is the most claimed condition for French Bulldogs aged 0-2 years.

Consider Your Own Healthcare Coverage

Just as pets experience accelerated aging and an increased likelihood of health issues, humans also face similar challenges as they grow older, which is reflected in rising health insurance premiums. As people age, they become more susceptible to various health conditions such as heart disease, diabetes, and arthritis, leading to higher medical expenses. Consequently, health insurance premiums for older adults are generally higher to account for the increased risk and potential cost of care. This comparison highlights the parallel in the insurance industry. Both your health insurance and your pet’s insurance premiums rise with age due to the higher probability of needing medical attention. By understanding this, you can better appreciate why your pet insurance premiums increase over time, just like your own health insurance costs.

Advancements in Veterinary Care

Technological advancements in veterinary care, such as more effective diagnostic testing and equipment, can improve the level of care provided to animals. However, these advancements also drive-up costs. Diagnostic tests, like blood tests, are crucial for identifying and treating diseases effectively. PetSure has noted a 14% year-over-year increase in the use of blood tests, which aids in early detection but adds to costs.

Additionally, costs for diagnostic testing have increased, reflecting higher prices from pathology labs and their subsequent impact on veterinary practices and clients. PetSure has observed a 23% year-over-year increase in diagnostic testing costs per claim. Price hikes for essential substances used by laboratories, such as bovine foetal blood, contribute to these rising expenses.

Beyond diagnostics, overall pet healthcare costs are subject to inflationary pressures. Technological innovations, sophisticated diagnostic tests, and improved medications like pain relief drugs enhance pet healthcare outcomes but come at an additional cost to pet parents.

Comparing Pet and Human Healthcare Costs

There’s a common misconception that veterinary costs exceed human medical expenses. However, PetSure research reveals that the cost of procedures for some conditions in humans is similar to the cost for pets. The difference is that, in human healthcare, we often don’t bear the full cost due to government initiatives like Medicare, the Pharmaceutical Benefits Scheme (PBS), and bulk billing.

For example, the cost of managing a cruciate ligament repair in humans is typically $3,800 for specialist fees (including Medicare rebate and out-of-pocket cost). In comparison, the average cost to treat this condition in dogs ranges from $3,000 to $4,000, which pet owners must cover entirely. according to the PetSure Pet Health Monitor 2024 Report.  

Financial Preparedness and Better Welfare

Being financially prepared for unexpected veterinary costs can lead to better outcomes for your pet. A recent PetSure survey indicated that 40% of pet parents would consider economic euthanasia if treatment costs exceeded $3,000. However, the cost to treat common ailments like skin allergies in dogs can reach $17,460, and treating traumatic injuries can cost upwards of $20,000. Therefore, having a plan to manage these expenses is crucial, whether it’s through a pet insurance policy, savings account, credit card or loan.

While pet insurance premiums generally rise each year, it’s a small price to pay for the peace of mind that comes with knowing you’re prepared for healthcare costs. Taking care of your fur baby when they need it most is a priority for every pet parent.

Sources

1 Pet insurance premium increases estimated using PetSure data. Health insurance increases estimated by a comparison to the average price increase for private health insurance (PHI) provided on: Average annual price changes in private health insurance premiums | Australian Government Department of Health and Aged Care. This average for PHI makes no allowance for changes in product coverage over the 27 years of data used. Comparison of a premium figure compounded over 80 years at 3.5% (human) versus 15 years at 20% (pet) gives a similar end state (within 3%). This implicitly assumes a similar premium trajectory on a comparable age basis.  

^ The human health cost examples are based on Medical Costs Finder | Australian Government Department of Health as at April 2023. The pet health costs are based on PetSure claims data January – December 2022. Note that the human health costs have accounted for Medicare rebates. 

# PetSure research on customer’s sentiment towards vet bills (Sept – Oct 2022) 

~ Based on PetSure claims data for the 2022 calendar year 

*Australian Government, Department of Health and Aged Care (https://www.health.gov.au/)  

** PetSure claims data, comparing claims paid in May – July 2022 to those paid in May – July 2023. 

Insurance products are issued by The Hollard Insurance Company Pty Ltd ABN 78 090 584 473, AFSL 241436 (Hollard) and/or PetSure (Australia) Pty Ltd ABN 95 075 949 923, AFSL 420183 (PetSure) (from 8 May 2023 only), administered by PetSure and promoted and distributed through their authorised representatives and distribution partners. 

Any advice provided is general only and does not take into account your individual objectives, financial situation or needs. Cover is subject to the policy terms and conditions. Please consider the Product Disclosure Statement (PDS) to ensure this product meets your needs before purchasing, or choosing to continue with the product. PDS and Target Market Determination available on our partners’ websites. Meet our partners at petsure.com.au/partners. 

Pet insurance can help by covering a portion of the eligible vet bill if the unexpected happens. Because it is difficult to predict the costs of veterinary care, it can help to have measures in place to help prepare for the unexpected. Check out our partner network and explore our policy tools to find a pet insurance policy. Not all conditions or items are covered by Pet Insurance. Refer to the applicable Product Disclosure Statement for information about coverage and exclusions.

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