Why Does Pet Insurance Go Up Every Year UK 2026 - What You Can Do

The recurring complaint in UK pet insurance is that the premium rises every year, regardless of whether the pet has claimed and regardless of the household's loyalty to the insurer. The complaint is grounded in real industry dynamics. UK vet costs have risen faster than general consumer price inflation across the early 2020s. The Competition and Markets Authority has been examining the corporate veterinary sector since 2024. Insurer books have absorbed the claims inflation and passed it through into renewal pricing. Individual pets have aged through their age bands. Each of these pressures contributes a layer to the renewal increase.

This guide unpacks the four main drivers, explains the FCA rules that prohibit some practices and require others, sets out what cohort pricing actually means, and provides the practical levers a UK pet insurance customer can use at renewal.

Driver one: vet cost inflation

The most visible driver is vet cost inflation. Specialist equipment, prescription medicine prices, locum staffing costs, premises costs, and the consolidation of independent practices into corporate veterinary groups have pushed treatment costs up at a multiple of general consumer price inflation. The Competition and Markets Authority's market investigation into the sector, opened in 2024 and still active in 2026, has acknowledged that pricing transparency in the sector falls below the standard consumers are entitled to expect under wider consumer law.

The vet cost dynamic feeds directly into the insurer's claims experience. A surgical procedure that cost 1,800 pounds in 2020 may cost 2,600 pounds in 2026. The same procedure being claimed for in 2026 produces a larger claim value, even where the underlying medical case is unchanged. The insurer prices the next year's book on the expectation of continued vet cost inflation, so the renewal premium includes a forward-looking inflation assumption.

Driver two: age-band uprating

The individual pet's age is a major rating factor. Most UK pet insurers uprate the premium at defined birthdays (often age four or five, then again at age seven or eight, then progressively into senior years). The uprate reflects the actuarial expectation that older pets are more likely to claim, more likely to claim for chronic conditions, and more likely to produce larger claims. The uprate is real and consistent across the market: it is not a feature of any particular insurer and switching does not avoid it.

Some insurers apply an excess percentage from a defined age (often age eight or ten), which transfers more of each claim cost to the policyholder rather than the insurer. The policy schedule sets out the age-band rules and the excess-percentage rules in detail. A renewal increase that coincides with an age-band birthday is partly explained by this lever, even before the other drivers are considered.

Driver three: cohort pricing and claims inflation across the book

Insurers group customers with similar risk profiles into cohorts (breed, age band, postcode, policy form) and price each cohort against its claims experience. A cohort whose claims have been worse than expected in the previous year produces a higher base premium for the entire cohort in the following year, regardless of whether the individual customer claimed. The customer experiences a "claim-free year, premium still went up" outcome that is rational at the cohort level even if it feels unfair at the individual level.

Cohort pricing is lawful under FCA rules. The FCA pricing rules in PS21/5 prohibit price walking across the renewal cohort (renewing customers paying more than equivalent new customers for the same product and risk), but they do not prohibit cohort pricing as such, and they do not require the insurer to absorb claims inflation rather than passing it through. The Consumer Duty requires the insurer to evidence fair value of the product for the target market, which includes cohort-level review.

Driver four: broader market pricing pressure

The fourth driver is the general insurance market environment. Reinsurance costs, capital market conditions, regulatory compliance costs (including the cost of implementing the Consumer Duty and PS21/5 themselves), and book-wide pricing decisions all affect every UK general insurance product. Pet insurance is not insulated from these forces. A year of higher reinsurance pricing pushes up the cost of writing pet insurance even where the underlying medical claims experience is flat.

The FCA pricing rules and what they actually prohibit

PS21/5, in force since 1 January 2022, prohibits the practice known as price walking. Price walking is where an insurer charges renewing customers more than equivalent new customers for the same product and risk, exploiting customer inertia. The rule was introduced after a multi-year FCA investigation into general insurance pricing that found the practice was widespread in motor and home insurance and material in pet insurance. The rule does not prohibit price increases at renewal. It requires the renewing customer to be on the same price the insurer would offer an equivalent new customer for the same product and risk on the same day.

The Consumer Duty, in force since 31 July 2023 for open products, requires insurers to monitor the price and benefits of the product against fair value standards for the target market and to act where the product does not represent fair value. The duty is supervised by the FCA and breaches can lead to enforcement action. Customer-level complaints are within scope of the Financial Ombudsman Service.

How to read the renewal notice

UK pet insurance renewal notices must state the previous year's premium, the current year's renewal premium, and a prompt to consider switching or shopping the market. They must also state the right of the customer to ask the insurer for an explanation of any price change. The renewal is the start of a fourteen-day cooling-off period under ICOBS 7 in the FCA Handbook, during which the customer can cancel the renewed policy and receive a pro-rata refund of premium less an administration fee and the cost of any cover used.

The first practical step at renewal is to ask the insurer for a breakdown of the increase, in writing. The request can simply state that the customer wishes to understand the proportion of the increase attributable to vet cost inflation, the proportion attributable to age-band uprating of the pet, the proportion attributable to cohort claims experience, and the proportion attributable to other factors. The insurer is not obliged to disclose its rating sheet, but it is obliged under the Consumer Duty to provide a clear explanation to a customer who reasonably asks.

Restructuring at renewal

The most reliable lever to manage the renewal increase is restructuring the policy. Raising the voluntary excess reduces the premium at the cost of a higher out-of-pocket per claim. Reducing the annual cover limit (while keeping the lifetime form) reduces the premium at the cost of a lower ceiling on each year's claims. Removing optional add-ons that are not used (behavioural, dental, complementary therapy, third-party liability for cats that do not need it, advertising and reward) reduces the premium with limited cover impact. Each lever stacks, and a combined restructure can produce a meaningful reduction without losing the lifetime form.

The lever most policyholders should avoid in isolation is switching insurer on a pet with a chronic condition. The headline saving is real, but the new policy excludes the pre-existing condition and the protection drops sharply. The lawful focus is usually on restructuring rather than switching, unless the pet is young and healthy and the switch is on like-for-like cover.

Challenging the renewal under PS21/5 and the Consumer Duty

Where the renewal price is materially higher than the price an equivalent new customer would pay for the same cover, the gap is a fair value question. The customer can raise the gap with the insurer in writing, citing PS21/5 and the Consumer Duty, and ask for an explanation. The eight-week DISP 1 clock applies. The insurer's final response must explain the outcome and the right to refer the matter to the Financial Ombudsman Service within six months.

The Ombudsman is the free, independent route for unresolved complaints. The Ombudsman can direct a reduction in the renewal premium, a refund of premium already paid, or other redress where it finds the renewal is not fair and reasonable. The published decisions database at financial-ombudsman.org.uk shows representative outcomes for renewal pricing complaints.

What this means in practice

Consider a household with a six-year-old cross-breed dog, no claims in the previous year, and a renewal that has risen from 41 pounds to 52 pounds a month. The household asks the insurer for a breakdown. The response attributes the increase to general vet cost inflation across the book (around 8 per cent), the age-band uprate at the dog's sixth birthday (around 5 per cent), and a cohort claims experience adjustment (around 10 per cent), with a small offset for the policy's loyalty discount. The household accepts the explanation in general but reviews the policy structure: the voluntary excess is raised, two unused add-ons are removed, and the revised premium comes in at 46 pounds a month. The household considers whether the gap between the renewal and an equivalent new-business quote is material; the gap is small, so the fair value challenge is not pursued.

Compare a household where the renewal has risen by 40 per cent on a healthy pet with no claims and no age-band birthday. The household checks an equivalent new-business quote and finds a gap of more than 25 per cent. The household raises a fair value complaint with the insurer in writing, citing PS21/5 and the Consumer Duty. The insurer's final response offers a small reduction; the household refers the matter to the Financial Ombudsman Service. The Ombudsman investigates, finds the gap is not consistent with the insurer's published fair value framework, and directs a further reduction. The household accepts the decision and retains the policy at the revised price.

Frequently Asked Questions

Why does my pet insurance premium go up even when I have not claimed?

Premiums rise for reasons that are partly independent of the individual customer's claims history. Vet cost inflation, the pet's age-band uprating, cohort claims experience across the insurer's book, and broader market pricing pressure all contribute. A claim-free year does not freeze the premium because the underlying expected claims cost has changed.

What is price walking and is it still allowed?

Price walking is where an insurer charges renewing customers more than equivalent new customers for the same product and risk, exploiting inertia. It has been prohibited in UK general insurance since 1 January 2022 under FCA PS21/5. The prohibition does not stop renewal increases driven by underlying risk and cost, only those driven by the customer's status as a renewing rather than a new customer.

What is cohort pricing?

Cohort pricing is the practice of grouping customers with similar risk profiles (breed, age band, postcode, policy form) and pricing each cohort against its claims experience. A cohort whose claims have been worse than expected pushes up the next year's base premium for the entire cohort, even for customers who have not claimed. Cohort pricing is lawful under FCA rules.

How do I ask my insurer to justify the renewal increase?

In writing, citing the Consumer Duty and asking for a breakdown of the increase by category: vet cost inflation, age-band uprating, cohort experience, and other factors. The insurer is not obliged to disclose its rating sheet but is obliged to provide a clear explanation. If the response is unsatisfactory, the formal complaints route applies under DISP 1, with the Financial Ombudsman Service as the escalation route.

What are the practical levers at renewal?

Restructuring the policy is the most reliable lever: raising the voluntary excess, reducing the annual cover limit, removing unused add-ons. Switching insurer is a lever for young, healthy pets with no claims history; it usually does not work for pets with chronic conditions because new policies exclude pre-existing conditions. A fair value challenge under PS21/5 and the Consumer Duty is available where the gap to an equivalent new-business quote is material.

Can the Financial Ombudsman Service order the insurer to reduce my renewal?

Yes, in cases where the Ombudsman finds the renewal pricing is not fair and reasonable in all the circumstances. Outcomes can include directed reductions in the renewal premium, refunds of premium already paid, and distress and inconvenience awards. The published decisions database at financial-ombudsman.org.uk shows representative outcomes.