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Extended Warranties and Insurance for Mobile and Non-Mobile Consumer Products in South Africa is about the market for extended warranties and insurance sold in conjunction with white goods, brown goods, grey goods, mobile gadgets and mobile phones (i.e. cellphones) in South Africa.

The study draws on extensive primary and secondary research covering over 100 organisations involved in the production and distribution of mobile and non-mobile consumer products including manufacturers, mainstream mobile network operators, mobile virtual network operators (MVNOs), specialised retailers of consumer electronics, supermarkets and other types of retailer (namely, department stores, DIY / furniture / home outlets, speciality retailers and variety retailers). Hence, it provides a comprehensive overview of this activity across South Africa.

Key features of this publication include:

- quantification of the market value for extended warranties and insurance linked to mobile and non-mobile consumer products: how much is the market likely to have been worth in South Africa in 2015, how did it split between white goods, brown goods, grey goods, mobile gadgets and mobile phones, and to what extent did each of these segments grow or decline in value since 2011?

- analysis of extended warranty underwriters and brokers that have established scheme relationships with manufacturers and retailers of white goods, brown goods, grey goods, mobile gadgets and mobile phones, including their unweighted and weighted share of partnerships;

- consideration of the potential for cross-selling stand-alone extended warranty and insurance policies through independent channels that are separate from either manufacturers or retailers (e.g. via personal / portable possessions cover): to what extent has this form of distribution developed in South Africa and who are the main competitors in this respect?

- forecasts for the value of the market for extended warranties and insurance linked to mobile and non-mobile consumer products up to 2019: assuming no significant changes in the number of manufacturer and retailer schemes, what factors will cause this sector to grow or decline in the next few years?

Table Of Contents

Extended Warranties and Insurance for Mobile and Non-Mobile Consumer Products in South Africa

TABLE OF CONTENTS
00 EXECUTIVE SUMMARY 1
10 INTRODUCTION 3
What is this report about? 3
Rationale 3
A number of factors are causing dynamics to change in the extended warranty and insurance sector… 3
… including shifts in consumer behaviour… 3
… especially in relation to their use of distribution channels 4
Methodology 4
Manufacturer and retailer survey 4
The survey's scope covers over 100 manufacturers and retailers of the consumer products in scope 4
Market data 5
Distribution channels for retailers 5
Definitions 6
Extended warranties and insurance 6
Extended warranties and insurance linked to consumer products come in a variety of formats… 6
…and are frequently marketed to consumers under alternative titles 6
Premiums and other revenues 7
Operating models 7
Weighted shares 8
PartnerBASE and market data annexe 8
Finaccord 9
20 WHITE GOODS 10
Introduction 10
Underlying market value and volume 11
The value and volume of sales of white goods have posted solid growth in recent years 11
Manufacturers' original warranty length and consumer law 12
Two-year factory warranties are provided most commonly for white goods… 12
Manufacturer schemes for extended warranties and insurance 13
… but extended warranties are rarely on offer from manufacturers 13
Retailer schemes for extended warranties and insurance 14
Around a half of major retailers of white goods operate an associated extended warranty scheme… 14
with a variety of operating models utilised to run these 15
Mutual and Federal's partnership with one leading retailer makes it a probable market leader 15
Combined analysis for manufacturer and retailer schemes 17
The combined analysis is dominated by partners employed for retailer programs 17
Risk coverage of all schemes for extended warranties and insurance 18
Most extended warranties for white goods are limited to providing cover for mechanical faults 18
Independent distribution channels 18
Market value for extended warranties and insurance 19
Market forecasts to 2019 20
The white goods market will continue to make steady progress through to 2019… 20
facilitating further progress in the market for related extended warranties 21
30 BROWN GOODS 22
Introduction 22
Underlying market value and volume 23
The brown goods market recorded a modest advance between 2011 and 2015 23

Manufacturers' original warranty length and consumer law 24
Most brown goods manufacturers in South Africa offer only a one-year factory guarantee… 24
Manufacturer schemes for extended warranties and insurance 25
… and most have yet to introduce extended warranties… 25
Retailer schemes for extended warranties and insurance 26
… albeit the participation of retailers in this field is a great deal more widespread 26
Constantia, Hollard and Mutual and Federal are all employed as external partners in this arena 26
Combined analysis for manufacturer and retailer schemes 28
JD Group emerges as the probable market leader in the combined analysis 28
Risk coverage of all schemes for extended warranties and insurance 29
Cover for accidental damage is rarely available through extended warranties for brown goods 29
Independent distribution channels 29
Market value for extended warranties and insurance 30
Market forecasts to 2019 31
South Africa's market for brown goods is predicted to carry on growing steadily up to 2019 31
… which will help to support further development of the associated extended warranty market 32
40 GREY GOODS 33
Introduction 33
Underlying market value and volume 34
In line with global trends, the value of the grey goods market retreated between 2011 and 2015 34
Manufacturers' original warranty length and consumer law 35
Most manufacturers of grey goods limit their factor guarantees to a single year 35
Manufacturer schemes for extended warranties and insurance 36
All manufacturers of grey goods manage their extended warranty programs on an internal basis 36
Retailer schemes for extended warranties and insurance 38
The supply structure for retailer extended warranties for grey goods is similar to that for brown goods 38
… albeit Digicape and Shop and Ship are also active in this field 38
Combined analysis for manufacturer and retailer schemes 40
The supply structure in this sphere is likely to be somewhat more fragmented 40
Risk coverage of all schemes for extended warranties and insurance 41
Cover for accidental damage is occasionally available with extended warranties for grey goods 41
Independent distribution channels 41
Market value for extended warranties and insurance 42
Market forecasts to 2019 43
The market for grey goods is forecast to continue drifting back between 2015 and 2019 43
…which is likely to translate into a further contraction of the related extended warranty market 44
50 MOBILE GADGETS 45
Introduction 45
Underlying market value and volume 46
The value of the South African mobile gadget market increased by around 65% between 2011 and 2015 46
Manufacturers' original warranty length and consumer law 47
One-year factory warranties constitute the norm among mobile gadget manufacturers… 47
Manufacturer schemes for extended warranties and insurance 48
… six of which offer consumers the option of extending their warranty 48
Retailer schemes for extended warranties and insurance 50
Retailer schemes for mobile gadget cover utilise a variety of operating models… 50
… with several external providers benefiting from multiple partnerships… 51
… and with 11 schemes managed on an internal or captive basis 51
Combined analysis for manufacturer and retailer schemes 53
Just over a half of the implied market value is attributable to five organisations 53
Risk coverage of all schemes for extended warranties and insurance 54
A significant proportion of schemes cover one or more of accidental damage, loss and theft 54
Independent distribution channels 54

Numerous firms promote personal / portable possessions insurance as an independent alternative 54
Market value for extended warranties and insurance 55
Market forecasts to 2019 57
Both the value and volume of the mobile gadget market will rise further through to 2019 57
… which will help to support the associated extended warranty and insurance market 58
60 MOBILE PHONES 59
Introduction 59
Underlying market volumes 60
Mobile subscriptions exceeded 65 million in 2015… 60
with well over 40 million individuals now owning at least one cellphone 61
Manufacturers' original warranty length and consumer law 62
Over a third of mobile phone manufacturers offer an original warranty of longer than one year… 62
Manufacturer schemes for extended warranties and insurance 63
… albeit only two offer an extended warranty scheme 63
Retailer schemes for extended warranties and insurance 65
Cellphone insurance is quite commonly available from mobile network operators and retailers 65
Administrators include Econorisk, Finrite Insurance Administration and Majestic Financial Services… 66
working with underwriters such as Constantia, Guardrisk and Hollard 66
Vodacom (via its captive underwriter) emerges as a probable leader in the weighted analysis… 66
Combined analysis for manufacturer and retailer schemes 68
… a situation which persists in the combined, weighted analysis for all schemes 68
Risk coverage of all schemes for extended warranties and insurance 69
A comparatively high number of mobile phone insurance schemes incorporate comprehensive cover 69
Independent distribution channels 70
Alternative sources of cellphone cover include Hippocoza and Sure Thing… 70
… plus a handful of fashion retailers 70
Market value for extended warranties and insurance 70
Market forecasts to 2019 72
Mobile phone subscriptions could increase by a further 10 million between 2015 and 2019… 72
which would equate to a mobile handset penetration rate reaching 85% of the total population 73
Several factors should help to buoy the market for cellphone insurance through to 2019 74

LIST OF GRAPHICS / TABLES

00 EXECUTIVE SUMMARY 1
Approximate market value for extended warranties and insurance linked to mobile and non-mobile consumer products in South Africa, 2011, 2015 and 2019 (forecast) 2
Approximate market value for extended warranties and insurance linked to mobile and non-mobile consumer products in South Africa, 2011, 2015 and 2019 (forecast) (table) 2
10 INTRODUCTION 3
Organisations researched in South Africa, segmented by type, 2015 4
Retailers researched in South Africa segmented by distribution channel, 2015 6
20 WHITE GOODS 10
Value and volume of sales of white goods in South Africa, 2011 and 2015 11
Comparative length of original warranties offered by manufacturers of white goods in South Africa, 2015 12
Manufacturer schemes for extended warranties and insurance linked to white goods in South Africa: provision rates and operating models, 2015 13
Retailer schemes for extended warranties and insurance linked to white goods in South Africa: provision rates and operating models, 2015 14
Retailer schemes for extended warranties and insurance linked to white goods in South Africa: unweighted and weighted provider share of partnerships, 2015 16
Manufacturer and retailer schemes for extended warranties and insurance linked to white goods in South Africa: combined analysis of weighted provider share of partnerships, 2015 17
Risk coverage of all schemes for extended warranties and insurance linked to white goods in South Africa, 2015 18
Approximate market value for extended warranties and insurance linked to white goods in South Africa, 2011 and 2015 19
Value and volume of sales of white goods in South Africa, 2015 and 2019 (forecast) 20
Approximate market value for extended warranties and insurance linked to white goods in South Africa, 2015 and 2019 (forecast) 21
30 BROWN GOODS 22
Value and volume of sales of brown goods in South Africa, 2011 and 2015 23
Comparative length of original warranties offered by manufacturers of brown goods in South Africa, 2015 24
Manufacturer schemes for extended warranties and insurance linked to brown goods in South Africa: provision rates and operating models, 2015 25
Retailer schemes for extended warranties and insurance linked to brown goods in South Africa: provision rates and operating models, 2015 26
Retailer schemes for extended warranties and insurance linked to brown goods in South Africa: unweighted and weighted provider share of partnerships, 2015 27
Manufacturer and retailer schemes for extended warranties and insurance linked to brown goods in South Africa: combined analysis of weighted provider share of partnerships, 2015 28
Risk coverage of all schemes for extended warranties and insurance linked to brown goods in South Africa, 2015 29
Approximate market value for extended warranties and insurance linked to brown goods in South Africa, 2011 and 2015 30
Value and volume of sales of brown goods in South Africa, 2015 and 2019 (forecast) 31
Approximate market value for extended warranties and insurance linked to brown goods in South Africa, 2015 and 2019 (forecast) 32
40 GREY GOODS 33
Value and volume of sales of grey goods in South Africa, 2011 and 2015 34

Comparative length of original warranties offered by manufacturers of grey goods in South Africa, 2015 35
Manufacturer schemes for extended warranties and insurance linked to grey goods in South Africa: provision rates and operating models, 2015 36
Manufacturer schemes for extended warranties and insurance linked to grey goods in South Africa: unweighted and weighted provider share of partnerships, 2015 37
Retailer schemes for extended warranties and insurance linked to grey goods in South Africa: provision rates and operating models, 2015 38
Retailer schemes for extended warranties and insurance linked to grey goods in South Africa: unweighted and weighted provider share of partnerships, 2015 39
Manufacturer and retailer schemes for extended warranties and insurance linked to grey goods in South Africa: combined analysis of weighted provider share of partnerships, 2015 40
Risk coverage of all schemes for extended warranties and insurance linked to grey goods in South Africa, 2015 41
Approximate market value for extended warranties and insurance linked to grey goods in South Africa, 2011 and 2015 42
Value and volume of sales of grey goods in South Africa, 2015 and 2019 (forecast) 43
Approximate market value for extended warranties and insurance linked to grey goods in South Africa, 2015 and 2019 (forecast) 44
50 MOBILE GADGETS 45
Value and volume of sales of mobile gadgets in South Africa, 2011 and 2015 46
Comparative length of original warranties offered by manufacturers of mobile gadgets in South Africa, 2015 47
Manufacturer schemes for extended warranties and insurance linked to mobile gadgets in South Africa: provision rates and operating models, 2015 48
Manufacturer schemes for extended warranties and insurance linked to mobile gadgets in South Africa: unweighted and weighted provider share of partnerships, 2015 49
Retailer schemes for extended warranties and insurance linked to mobile gadgets in South Africa: provision rates and operating models, 2015 50
Retailer schemes for extended warranties and insurance linked to mobile gadgets in South Africa: unweighted and weighted provider share of partnerships, 2015 52
Manufacturer and retailer schemes for extended warranties and insurance linked to mobile gadgets in South Africa: combined analysis of weighted provider share of partnerships, 2015 53
Risk coverage of all schemes for extended warranties and insurance linked to mobile gadgets in South Africa, 2015 54
Approximate market value for extended warranties and insurance linked to mobile gadgets in South Africa, 2011 and 2015

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