Has corporate consolidation broken the pet insurance model?

The UK pet insurance market is facing a structural squeeze that has become impossible to ignore. The latest findings from the Competition and Markets Authority’s (CMA) investigation into veterinary services, published 15 October 2025, brought renewed scrutiny on the veterinary industry, highlighting how consolidation is reshaping pricing, competition and, ultimately, insurance claims.

For pet insurers, the report largely confirmed what has long been suspected – that rising veterinary bills, and thus claims costs, are not simply a by-product of general inflation or better clinical care, but are being materially influenced by ownership structures within the veterinary practice market.

According to the CMA, large veterinary groups (LVG’s) now own around 60% of local practices, up from just 10% in 2013. The regulator’s analysis found that acquisitions by these groups were associated with 5% higher insurance claim values and average prices 9.2% higher within four years of a takeover.

For insurers, that translates into a direct and growing pressure on loss ratios. When treatment costs rise, claims costs follow.

Kay Chand, partner at Browne Jacobson, said the evidence strengthens the link between consolidation and claims inflation.

“The regulator had examined a range of factors, including inflation and service improvements, and it still didn’t account for the amount of increasing prices that LVG practices have imposed,” she said.

“If a treatment is going to cost more, then the insurer is going to be picking that up.”

This reflects a structural challenge facing the sector, that insurers have very limited influence over pricing once a pet has been treated.

Claims pressure builds

The scale of veterinary inflation is now difficult to dismiss. Between 2016 and 2023, veterinary prices rose by 63%, while average treatment costs increased by 53%. Over the same period, general inflation, while high, stood at a much-lower 32%.

The CMA concluded that these increases could not be fully explained by rising operating costs or improvements in clinical outcomes alone.

For insurers, the impact is straightforward, with higher treatment costs flowing directly into higher claims costs.

Yet for some, the story is not solely about consolidation.

Frances Luery, product manager at Defaqto, said veterinary inflation is being driven by a combination of structural and behavioural shifts across the market.

“Twenty years ago, you probably wouldn’t have given chemotherapy to a pet,” she said. “People expect that now.”

She describes this as an “inflation of expectations”, where pet ownership increasingly mirrors human healthcare norms. Pets are now treated as family members and owners are more willing to pursue complex and costly interventions.

At the same time, broader demographic and clinical factors are also feeding into claims costs. Certain breeds are more prone to hereditary conditions, while pets acquired during the Covid-19 boom are now entering later life stages where health issues are more common.

“All of those points are definitely a factor,” Luery said.

Consolidation concerns grow

Even so, consolidation of veterinary practices remains the most politically sensitive driver of change.

Luery warns that the expansion of LVG’s risks reducing competition at a local level, often in ways consumers do not recognise.

“You’re going to end up with some monopolies in certain areas and, potentially, with consumers not knowing they’re monopolies either,” she said.

Before the CMA’s investigation, ownership structures were often opaque, meaning pet owners may have believed they were comparing independent practices when, in reality, they were not.

However, consolidation is not without benefits. Larger groups can invest in equipment, technology and back-office systems that would be difficult for smaller practices to fund independently. The tension, regulators argue, lies in balancing these efficiency gains against reduced competitive pressure.

A competition paradox

One of the most unusual dynamics in the market is that rising claims costs have been occurring alongside falling premiums.

According to Defaqto data, like-for-like pet insurance premiums have continued to decline even as veterinary inflation accelerates.

“I think that is going to be causing pressure for insurers,” Luery said.

Insurers remain heavily exposed to price competition, particularly through comparison websites. That has limited their ability to pass rising costs directly onto consumers.

Instead, many providers have adjusted product design. Higher excesses and co-payments are increasingly common as firms look to share cost inflation with policyholders rather than absorb it entirely.

Luery notes that nearly half of products now include some form of co-payment structure.

And while this helps manage claims pressure, it also raises longer-term questions about affordability and perceived value.

Transparency reforms on the way

In response to concerns about competition and pricing opacity, the CMA has proposed a package of reforms including mandatory ownership disclosure, published price lists, itemised billing and written treatment estimates for procedures above £500.

Chand said she believes these changes could be significant for insurers.

“Data is key,” she said. “The more of that you get, the better you can make informed decisions, conduct better analytics and inform your policies, processes and procedures going forward.”

She argues that better visibility could strengthen underwriting, improve fraud detection and support more accurate claims modelling. It may also help insurers meet growing expectations under Consumer Duty requirements.

For consumers, the aim is clearer and more consistent pricing information when choosing veterinary care.

“Transparency is always a good thing,” Chand said, though she claimed that decisions are not driven by price alone. Location, trust, convenience and existing relationships with vets all remain important factors.

Rethinking the insurance model

While the CMA has focused on veterinary market structure, some in the insurance industry argue that insurers also need to reassess their own operating models.

Kesh Thukaram, chief executive at Best Insurance, said the sector remains overly reliant on traditional underwriting models built around static risk indicators such as breed, postcode and claims history.

”The industry is effectively underwriting averages rather than underwriting pet health itself,” he said.

Research published by Best Insurance and Excitare.ai in May 2026 that surveyed 2,000 people suggested that 82% of UK pet owners were concerned about rising veterinary costs, while 43% remain uninsured. Almost a quarter have cancelled a policy in the past two years.

Thukaram believes the solution lies in shifting towards more personalised underwriting using real-time health data. Wearables, AI-enabled diagnostics, preventative care tools and pet health monitoring could allow insurers to price risk more dynamically.

The approach mirrors broader trends in health and life insurance, where preventative behaviour and continuous monitoring are increasingly factored into pricing and rewards.

Looking ahead

Following the CMA’s report being published, the focus has now shifted to implementation. The CMA’s reforms are expected to be phased in over the coming years, with larger groups likely to face earlier compliance deadlines.

But whether these are sufficient to slow claims inflation remains uncertain.

What is clear is that insurers are being squeezed from multiple directions – rising treatment costs, intense price competition, shifting customer expectations and growing affordability pressures.

Luery said she believes the current trajectory is difficult to sustain.

“I don’t think it’s sustainable,” she said.

While insurers have leaned increasingly on co-payments and higher excesses to manage costs, she warns this risks undermining the perceived value of insurance itself.

At some point, she suggests, consumers may begin to question why they are paying premiums if they are still funding a large proportion of treatment costs.

Over the next five years, she expects the market to evolve into a more mature, structurally adjusted sector, similar to other established lines of insurance.

When asked about the market’s future, Chand said: “In an ideal world, you’d have more pets being covered with an insurance policy, if it’s the insurers providing good products and consumers getting protection for their beloved pets.

“The insurers, consumers and vets – that whole ecosystem working together. That would be a win-win, I think.”

For now, however, the CMA’s findings have exposed a central tension, that veterinary costs continue to rise, insurers have limited leverage over pricing and pet owners ultimately absorb the impact through premiums, excesses or both.

Whether transparency and reform can rebalance that equation may determine not just the future of veterinary competition, but the long-term viability of pet insurance as it currently exists.