For a market that barely existed a decade ago, mobile phone insurance products have boomed in popularity as more and more people take up ownership of the expensive devices.
One market research firm has claimed that mobile phone insurance and extended warranties has even outstripped travel insurance. Finaccord has estimated the mobile phone insurance market, which it defined as policies specifically dedicated to mobile phone protection and sold separately to customers, was worth around USD$13.3 billion globally in 2015. The company estimated the industry is on track to rise to a value of around USD$17.6 billion by 2019.
Consultant at Finaccord Claire Fetherstonhaugh said the worldwide market for mobile phone cover is not especially large when compared with other 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,” said Fetherstonhaugh. “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.”
The growth comes from the rise in ownership of smartphones, and subsequently the greater rate at which they are being purchased with insurance or an extended warranty. Consumers who purchase subsidised smartphones are locked to a contract for between 18 and 24 months. Insurance for this period is an easy sell, since replacing the handset during this time is quite expensive, especially if a customer is paying off the price of their handset monthly.
The research conducted by Finaccord covered almost 1,700 actual and potential distributors of mobile phone coverage across 40 countries.
Fetherstonhaugh said the market for phone insurance has a positive outlook.
“This is because so many consumers are owners of mobile handsets but relatively few have acquired insurance for them,” she said. “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.”
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