U K Insurance Limited trading as Direct Line · DRN-6240357

The complaint Mr B complains about the price quoted by U K Insurance Limited trading as Direct Line to renew his pet insurance policy. What happened Mr B received a quote to renew his policy which he says was significantly higher than what he’d paid the previous year. Mr B complained about the price increase and Direct Line responded and explained the price had been calculated correctly and in line with other customers whose pets presented the same level of risk. They explained they had taken into account factors such as the product purchased, the age and breed of Mr B’s pet. They did manage to apply a 5% retention discount. Our investigator looked into things for Mr B. He thought Direct Line hadn’t treated Mr B unfairly in relation to the pricing. Mr B disagreed so the matter has come to me for a decision. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having done so, I’ve decided not to uphold the complaint. I understand Mr B will be disappointed by this, but I’ll explain why I have made this decision. The role of this service when looking at complaints about insurance pricing isn’t to tell a business what they should charge or to determine a price for the insurance they offer. This is a commercial judgement and for them to decide. But we can look to see whether we agree a consumer has been treated fairly – so is there anything which demonstrates they’ve been treated differently or less favourably. If we think someone has been treated unfairly, we can set out what we think is right to address this unfairness. I can see Mr B paid a premium of £318.41 in 2024 (the first year of the policy) but then received a quote for £522.22 in 2025. This is around 65% more than what Mr B paid the year before. So, I understand why Mr B is concerned about the price increase. Direct Line have provided me with confidential business sensitive information to explain how Mr B’s price increase was calculated. They have explained it is in part due to veterinary fee inflation and Mr B’s pet getting older. I’m afraid I can’t share any more of this with Mr B because it’s commercially sensitive, but I’ve checked it carefully. And I’m satisfied the price Mr B was quoted has been calculated correctly and fairly and I’ve seen no evidence that other Direct Line customers in Mr B’s position will have been charged a lower premium.

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As mentioned above, I can’t provide specific detail about Direct Line’s risk model, but I can see one factor which has contributed to the price increase relates to the market and claims knowledge. Insurers will regularly monitor claims performance to determine how factors such as vet fees will impact the amount they may need to pay out for claims. It’s not unusual or uncommon for insurers to take into account this factor when rating a policy – and in this case I’ve seen how this impacted the price. The pricing information shows how this factor has been rated and the impact on the price. So, I can’t say Direct Line have acted unfairly here. Mr B’s policy is a maximum benefit policy. It provides a fixed amount of money to treat each condition for as long as the money lasts. Cover continues for each condition until the maximum amount is reached, as long as the policy remains in force and premiums are paid. Covering every individual accident or illness up to £8,000. I think someone would take out a policy like this with the intention of retaining it on a long-term basis and likely for the lifetime of their pet. So, it would be important for a consumer to be aware from the outset what the cost implications of that might be. I’ve seen from information provided by Direct Line, that Mr B was previously made aware that the price of his policy may increase and the reasons for this. The Insurance Product Information Document (IPID) given to Mr B at inception stated, “the premium is likely to increase as your pet gets older”. I think the communication around this was clear and designed to manage Mr B’s expectations around price increases in the future. Another factor which has contributed to the price increase relates to a general insurance price increase. It’s been widely publicised over the last few years that the price of insurance has increased due to claims inflation and insurers facing rising costs in settling claims – and in the case of pet insurance, increasing veterinary costs have contributed to this. I’ve seen how Mr B’s policy was rated and the loadings which have led to the price increase. This forms part of Direct Line’s pricing model so it applies to all policies. I think that’s important here as it demonstrates the pricing model used to calculate Mr B’s premium was no different to what was used for any other customer in the same circumstances. I understand why Mr B has complained, and I hope he feels reassured that I’ve checked the pricing information from Direct Line. But I can’t say they’ve made a mistake or treated him unfairly. My final decision For the reasons I have given, it is my final decision that the complaint is not upheld. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr B to accept or reject my decision before 23 April 2026. Yoni Smith Ombudsman

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