Insurtech | Georgina | 23 January 2019
The Pet Food Manufacturers Association estimates the UK pet population to include 9 million dogs and 8 million cats, with 45% of British households hosting at least one of our furry friends. Intelligence agency Mintel calculated the total gross written premium for the UK pet insurance market at £1.2 billion. As insurance markets go, that’s pretty big.
It is easy to assume that the well developed pet insurance marketplace is already saturated, with well-know names such as Allianz PetPlan, L&G Pet and Direct Line Pet appearing at the top of many pet owners list of insurers. However, according to a recent Mintel market report, 45% of cat or dog owners do not have pet cover, with half of all cats currently uninsured. The report highlights that a fifth of pet owners are convinced insurers avoid paying claims and more than a third of owners, who consider that pet insurance do not represent good value.
Enter Waggel, helmed by founder and chief dog whisperer Andrew Leal. They’re considered by many to be an InsureTech disruptor. Launched on December 10th last year, nascent Waggel, underwritten by Compass Underwriting, is groomed to provide ‘Pet insurance for pet people’. Eschewing rabbits and unburdened by the complexities of equine or more exotic pets, Waggel takes a simple approach, providing cover just for cats and dogs.
There is no app as yet. But, the website is contemporary and the simplified quote journey straightforward. However, these are features which are not dissimilar from most insurers in the UK pet market, or other more established InsureTech players such as Bought By Many. Where the Waggel offering begins to diverge is in discount perks on pet food & accessories and the opportunity for customers to donate unclaimed amounts to pet charities.
Pay as you go
The real differentiator and akin with disruptors along the lines of Lemonade or Cuuva, is Waggel’s pay-as-you-go monthly, on-demand subscription model. This allows pet owners to purchase cover for their pet, as they would a Netflix subscription. (Check out our white paper here about how the established insurer could outsmart the disruptor).
It is this krypton factor that makes Waggel a true disruptor. It allows the start-up to target those lower tier customers unwilling or unable to commit to a standard annualised insurance policy. While ‘Netflix-thinking’ might be counter-cultural for some of us, the approach is likely to attract more tech-savvy customers. Waggel will inevitably capture some existing customers from other providers. However, there are millions of untapped customers which sit below the business models of established traditional insurers.
Even if alert, those insurers are unlikely to attempt to match Waggel’s proposition. Generally, incumbent insurers will be aware of the deficit, but consider those lower tier customer groups to be unprofitable or unreachable without damaging the profile of their established brand.
How far Waggel can penetrate into that unserved market is uncertain, however, evidence from other start-ups suggest that the monthly subscription model approach is the key to finding those new markets. This is especially the case when coupled with the convenience of web or app delivery.
Increasingly, Lemonade is becoming considered the InsureTech template for other upstart contenders. Yael Wissner-Levy, Lemonade’s Head of Communications and Content, underlines the importance of unfulfilled markets; “Our overarching conclusion from the past few months is we are getting to a whole new market who were never insured before.” Wissner-Levy reports that 85% of customers are first-time buyers and not switchers from another insurer.
Waggel’s lower tier, untapped customer strategy is likely to yield results but the key to Waggel’s future success, is dependent upon their ability to exploit the subscription model as a unique selling point, chiefly while they have a good head start. Competition is likely to rise. One such, is fellow InsureTech start-up Brolly. They aim to add Pet coverages in the near future, although it’s not known if this will include a pay-monthly model. However, Brolly is buoyed by their ability to offer pet as a component to a wide range of insurance covers.
Where we have seen InsureTech start-ups aim at niches, another potential threat is that even deeper niche-driven start-ups might appear. With the large number of uninsured cats, a pure cat-only start-up, offering monthly subscription, app delivery and pet owner-friendly branding could become a possible competitor. Especially if that new entrant can overcome the value and trust issues some customers groups consider a barrier to insuring their feline friend.
We wrote an interesting White paper from the point of view of the ‘mature’ and established insurer and how they could disrupt the disruptor. Check it out here.
The evidence strongly suggests that Waggel is unlikely to pose a serious threat to established pet insurers. New, unfulfilled markets await and that is where Waggel can really excel.