Average top-five prices for Lifetime cover fell by -1.8% across Q2. Prices declined by -2.3% in both April and May before rising by 2.8% in June, partly reversing the reductions recorded earlier in the quarter. Despite the June increase, Lifetime prices remain -6.4% lower than at the beginning of the year and have fallen by -7.8% over the past 12 months.
Higher-cover products lead the rebound
The change in direction was particularly evident among products offering higher levels of veterinary fee cover. Average top-five prices for policies providing at least £5,000 of cover rose by 1.7% during Q2, although they remain -5.9% lower than a year ago. The contrasting quarterly and annual movements indicate that insurers may be beginning to adjust prices selectively, rather than applying increases consistently across their portfolios.
Price movements also varied by policy type. Maximum Benefit and Time-Limited policies recorded only modest year-on-year reductions and did not experience the pronounced fall in prices seen among Lifetime products during the first quarter.
Prices rise across the market in June
The June increase was broad-based, with prices rising for both cats and dogs, across every age group and in all UK regions. However, annual reductions remain significant. Average top-five prices for dogs are -8% lower than a year ago, compared with a -6% reduction for cats. Prices for kittens and puppies have fallen by around -10%, while the reduction for animals aged over six is approximately -4%.
Customer contributions rise as veterinary costs continue to climb
The reduction in headline prices continues to contrast with the rising cost of veterinary care. Since 2023, Defaqto’s analysis shows that its index of pet insurance prices has increased by approximately 4%, compared with a 31% rise in the ONS Veterinary Services Index.
Insurers are increasingly managing this gap through product design, including higher excesses and co-payments. Defaqto’s analysis shows that a customer claiming the full veterinary fee allowance would, on average, contribute around 20% more towards the claim than they would have done 12 months ago.
Frances Luery, Product Manager at Defaqto, said: “Pet insurance prices continued to fall overall during the second quarter, but June marked a clear change in direction. A 2.8% monthly increase does not establish a new trend on its own, although the breadth of the movement suggests that some insurers are beginning to respond to the growing gap between premiums and veterinary costs.
“The market remains highly competitive and consumers can still benefit from prices that are materially lower than a year ago. However, the headline premium is only part of the picture. Excesses, co-payments and other customer contributions are becoming increasingly important as insurers seek to manage claims inflation. We expect pricing to remain competitive, but further selective increases are likely during the second half of the year as insurers seek to balance affordability with the sustained rise in veterinary and claims costs.”
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