Pet insurance headline premiums continued to fall across the UK in the second quarter of 2026, but the gap between what policyholders pay at point of sale and what they contribute at claim is growing. That distinction has direct implications for brokers advising clients on cover adequacy.
Data from Defaqto's Pet Insurance Pricing Index shows that a customer claiming the full veterinary fee allowance on their policy would contribute around 20% more towards the claim than they would have done 12 months ago. Insurers are managing that shortfall through product design: higher excesses and co-payments rather than headline price adjustments.
Average top-five prices for lifetime cover fell by 1.8% across the second quarter of 2026, with declines of 2.3% in both April and May. June reversed course with a 2.8% rise that partly offset the earlier reductions. On a 12-month basis, lifetime prices remain 6.4% lower than at the start of the year and 7.8% lower than a year ago.
The June increase covered cats and dogs across every age group and all UK regions. Products with at least £5,000 of veterinary fee cover recorded a 1.7% quarterly rise, even though they remain 5.9% lower than a year ago. Defaqto said the contrasting movements suggest some insurers are beginning to adjust prices selectively across their portfolios rather than applying changes uniformly.
Maximum benefit and time-limited policies saw only modest annual reductions. They did not experience the pronounced price falls recorded in lifetime products during the first quarter.
The sustained divergence between insurance pricing and veterinary cost inflation explains why headline premiums are falling while client contributions at claim are rising. Since 2023, Defaqto's index of pet insurance prices has risen by approximately 4%, against a 31% rise in the ONS Veterinary Services Index over the same period.
That gap is being absorbed through policy structure. The Competition and Markets Authority (CMA) found that average veterinary prices rose by more than 60% since 2016. Its March 2026 report concluded that planned reforms to the UK veterinary sector are unlikely to result in meaningfully lower treatment costs.
For brokers, the implication is practical. A client who has benefited from lower renewal premiums may be carrying a policy with higher excesses or co-payment obligations that were not prominent at the point of sale. The practical check is straightforward: compare the excess and co-payment terms on a client's current policy schedule against the version issued at their last renewal, rather than relying on the headline premium figure alone to judge whether cover has genuinely improved or simply got cheaper on paper. Since insurers appear to be adjusting these terms selectively across portfolios rather than uniformly, as Defaqto itself notes, a like-for-like comparison at the policy-wording level is the only reliable way to confirm what a client is actually contributing at claim time this year versus last.
The soft pricing cycle that produced those reductions shows early signs of turning. Defaqto's Q1 2026 index recorded a 4.7% fall in lifetime premiums, but the June data marks the first broad monthly increase across the market since that report.
Frances Luery, product manager at Defaqto, said the June rise "does not establish a new trend on its own," but noted the breadth of the movement suggests some insurers are responding 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," she added. "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.”
