Lifetime pet premiums fell by 2.3% in Q4 of last year, reversing the 0.9% increase recorded in the previous quarter. The figures come from the latest pet insurance pricing index from Pearson Ham and highlight the impact of increasing competition on rates despite rising veterinary costs.

Pearson Ham said data from the Office for National Statistics showed that fees for veterinary services were up by around 37% since 2023, outpacing premium movements and widening the gap between claims costs and pricing.

Frances Luery, product manager at 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.”

Looking ahead to the coming year, Consumer Intelligence said increasing moves towards automated claims handling would help insurers, although striking a balance between competitiveness and profitability would be difficult.