UK pet insurance premiums fell again in the final quarter of 2025, even as veterinary costs continued to climb sharply, according to the latest Pet Insurance Pricing Index from Pearson Ham Group’s Market Pricing Business, now part of Defaqto. The data points to a market still locked in intense price competition and struggling to align premiums with underlying claims inflation.
The Index showed lifetime premiums fell by 2.3% in Q4, with prices easing in each month of the quarter. That decline reversed a modest 0.9% rise in Q3, suggesting the tentative stabilisation seen over the summer was short‑lived as insurers re‑entered a more aggressive pricing phase towards year‑end.
On a 12‑month basis, lifetime premiums ended 2025 1.6% lower than a year earlier, with pricing movements alternating quarter‑by‑quarter. Increases in Q1 and Q3 were outweighed by sharper falls in Q2 and Q4, leaving average prices flat to down over the year despite clear upward pressure on claims costs.
How the market got here
The latest figures come after several turbulent years for UK pet insurance. Before and during the pandemic, strong pet ownership growth and rising veterinary sophistication pushed both demand and claims costs higher, prompting a broad repricing cycle from around 2021 onward. Insurers steadily increased rates and tightened some product features to catch up with higher treatment costs, more advanced procedures, and greater utilisation as owners became more willing to seek veterinary care.
By 2023–2024, that correction phase had largely worked through the system. Premiums at higher cover levels were significantly above pre‑cycle levels, and a number of brands had exited or repositioned in response to loss‑ratio pressure. At the same time, aggregators and newer entrants intensified competition in core dog and cat segments, especially for lifetime products, putting a ceiling on how far and how fast carriers could continue to push price.
The result, as the Pearson Ham data now shows, is a market that has moved from sharp upward repricing into a more delicate balancing act: trying to defend share and grow books while underlying costs, particularly vet fees, continue to edge higher.
Product, age and species drive different patterns
By product type, time‑limited policies continued to see the most consistent rate reductions through 2025, outpacing falls in lifetime and maximum‑benefit cover.
Pricing also diverged by age band. Premiums fell across all age groups in Q4, but the most pronounced year‑to‑date reductions were among animals aged four to six, where competitive pricing from leading brands pushed average rates down by around 4% over 2025.
Cats and dogs followed different trajectories. Cat premiums ended 2025 close to where they started, despite some intra‑year volatility. Dog premiums, however, declined more steadily, highlighting sustained competitive pressure in the largest and most claims‑intensive part of the market.
Market at a crossroads for 2026
Commenting on the findings, Frances Luery of Pearson Ham Group said: “The fall in premiums during Q4 underlines just how competitive the pet insurance market remains. The modest uplift we saw in Q3 proved fragile, with insurers clearly willing to give ground again on price as the year drew to a close."
“What is becoming increasingly striking is the growing disconnect between premium levels and underlying cost pressures. Veterinary costs continue to rise sharply, yet premiums have stagnated or fallen over much of the past two years. While automation and smarter claims handling will help, the challenge for insurers in 2026 will be finding a sustainable balance between competitiveness and long‑term profitability," he said.
For brokers and MGAs, that tension is already shaping discussions with capacity providers. Falling dog rates and heavy competition at higher cover limits remain attractive to consumers and aggregators, but if vet‑cost inflation and utilisation trends do not ease, more selective appetite, tighter wordings or further product segmentation may follow as carriers look to protect loss ratios in the next phase of the cycle.
