Pet insurance in China

In China, rapid economic development, rising living standards and advances in technology have fueled demand for pet insurance. Though still a niche business, pet insurance is a promising growth opportunity with significant potential for property insurance companies. We forecast China's pet insurance premiums to reach about RMB 1.4 billion (USD 216 million) by 2025, with a pet insurance penetration of 1.2%. This report is available in Chinese only.

This report analyses China's pet insurance market and provides recommendations for the insurance industry, based on recent Swiss Re market research focusing on veterinarians (vets), pet owners and their pets. The rapidly growing pet industry is leading to a significant protection gap for pet owners. The research identifies pet medical treatment as a high-cost but relatively infrequent event and, from an insurable-risk perspective, as an attractive segment for the insurance industry to add value by providing risk transfer and mitigation. 

Strong relationships between pet owners, vets and insurers are key to grow the pet insurance market. It is critical to involve all parties in a closed loop that covers insurance, prevention, diagnosis and medical treatment by designated vets, and timely claims pay-outs to pet owners. We see this as beneficial for all three of these stakeholders in the value chain, and, by establishing best-practice standards, also benefiting the wider pet industry.

Source: Swiss Re Institute

Pet insurance in China began its latest expansion phase in 2019. The domestic pet industry has experienced explosive growth enabled by rising per-capita income and growing pet ownership, a thriving vet industry, greater public awareness of animal protection, and scientific advances in pet care. These have combined to create favourable conditions for increasing insurance coverage to pet owners. Property and Casualty (P&C) insurers are starting to invest in pet insurance, while key distribution channels such as Alibaba are partnering with insurers and using their traffic and technology edge to tap this market. 

We see market demand and insurers' efforts to improve insurance accessibility and suitability driving the development potential of pet insurance in China. However, there are still challenges to overcome. Drawing on the experience of mature markets, the report highlights the importance of expanding coverage while emphasising risk management throughout the value chain. We recommend insurers make collaborative efforts to 1) cooperate with vets, 2) diversify distribution channels, 3) invest in end-to-end risk management and 4) standardise underwriting and claims guidelines. We believe that as insurers grow to be professional, full-service providers of pet medical treatment and care, insurance will be indispensable to families with pets.