Global Mobile Phone Insurance and Extended Warranties: A Worldwide Review
The global market for mobile phone (cellphone) protection is on track to be worth around USD 17.6 billion in gross written premiums and similar revenues by 2019
According to new research published by Finaccord, the global market for stand-alone mobile phone (cellphone) insurance and extended warranties – defined as policies specifically dedicated to mobile phone protection and sold separately to customers as opposed to being bundled with banking products or other types of insurance – was worth around USD 13.3 billion in gross written premiums and similar revenues in 2015. Furthermore, it is on track to rise to a value of around USD 17.6 billion by 2019.
Commented Claire Fetherstonhaugh, Consultant at Finaccord: “The worldwide market for mobile phone cover is not especially large when compared with other consumer insurance markets such as personal motor and home insurance. In fact, premiums for those lines were worth around USD 461.0 billion and USD 210.2 billion, respectively, in 2015. However, it has already overtaken travel insurance which had a global stand-alone value of around USD 15.8 billion in 2015. Moreover, as with travel insurance, the mobile phone insurance and extended warranty sector is likely to be increasing at an annual rate that is significantly ahead of both motor and home insurance.”
Finaccord’s research indicates that the rise in ownership of smartphones is boosting take-up rates for mobile phone cover globally, as individuals with such handsets are more likely to purchase insurance or extended warranty cover. Simultaneously, the increase in smartphones has led to growth in contract or post-paid mobile subscriptions, as smartphones are much more likely to be acquired from a mobile network operator on a subsidised basis, with the price of the phone often paid over the length of the contract (which is typically 18 to 24 months for a new-model smartphone).
Consequently, consumers who acquire a subsidised smartphone from a mobile network operator under contract are tied for up to two years to a particular handset which would be expensive to replace, and are already under agreement to pay a set amount per month to their operator, thereby making the addition of a mobile phone insurance or extended warranty policy a more attractive proposition to market.
“Other commentators have put the worldwide value of this market at over USD 30 million already but, according to our analysis, it could take another ten years for it to reach that value,” continued Claire Fetherstonhaugh. “Nevertheless, if more major mobile network operators launch schemes for this type of cover – something which is not factored into our forecast as it stands – or if independent distributors are able to expand their share of the market, then revenues from it could grow more rapidly.”
Overall, the research undertaken by Finaccord covered close to 1,700 actual and potential distributors of mobile phone cover across 40 countries comprising retailers (including mobile network operators) and manufacturers. Among these, at 37.7%, well over a third had a program up and running for mobile phone protection with these most widespread (perhaps unsurprisingly) among mobile network operators. Concluded Claire Fetherstonhaugh: “At a worldwide level, the outlook for the market for mobile phone insurance and extended warranties is a positive one. This is because so many consumers are owners of mobile handsets but relatively few have acquired insurance for them. The expansion of this sector will potentially benefit a range of different market participants including not only insurance underwriters and brokers with expertise in the area but also handset manufacturers plus administrators and repair firms.”
Global Mobile Phone Insurance and Extended Warranties: A Worldwide Review
