Extended Warranties and Insurance for Mobile and Non-Mobile Consumer Products in the USA is about the market for extended warranties and insurance sold in conjunction with white goods, brown goods, grey goods, mobile gadgets and mobile phones in the US.

The study draws on extensive primary and secondary research covering 276 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 the US, which is the world's largest market for extended warranties and related insurance.

Key features of this publication include:

- quantification of the market size for extended warranties and insurance linked to mobile and non-mobile consumer products: how much is the market likely to be worth in the US, and how does it segment between white goods, brown goods, grey goods, mobile gadgets and mobile phones?

- 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 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: to what extent has this form of distribution developed in the US?

- forecasts for the market size for extended warranties and insurance linked to mobile and non-mobile consumer products up to 2016: 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

TABLE OF CONTENTS

0.0 EXECUTIVE SUMMARY 1

1.0 INTRODUCTION 3

What is this report about? 3
Rationale 3
The market for extended warranties and insurance for consumer products has been little studied 3
Evolving distribution channels both favour and compromise extended warranty provision 3
Methodology 4
Manufacturer and retailer survey 4
The survey's scope covers 276 manufacturers and retailers of mobile and non-mobile consumer products 4
Market data 4
Distribution channels for retailers 5
Most distributors of consumer electronics in the US operate mixed retail models 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 6
Operating models 7
PartnerBASEâ„¢ and market data annexe 7
Finaccord 8

2.0 WHITE GOODS 10

Introduction 10
Underlying market value and volume 11
The value and volume of sales of white goods has increased only slightly in recent years 11
Manufacturers' original warranty length and consumer law 12
More than two thirds of manufacturers offer only one-year warranties for white goods 12
Manufacturer schemes for extended warranties and insurance 13
More than 40% of manufacturers of white goods in the US maintain an extended warranty program 13
…with Assurant holding the most partnerships in this field 13
Assurant secured total extended warranty premiums of USD 1.47 billion in the US in 2011 13
Retailer schemes for extended warranties and insurance 15
Around three quarters of retailers of white goods have developed extended warranty schemes 15
with AmTrust identifiable as the most frequently used warranty and service specialist 15
In the wake of funding from Bain Capital, SquareTrade reported rapid growth in 2012 15
Assurant and NEWAsurion also fill roles as prominent external providers for white goods cover 15
Sears Protection Company serves as captive provider to two different brands in the Sears group… 16
…while a significant proportion of retailers operate internally-administered schemes 16
Risk coverage of all schemes for extended warranties and insurance 18
Extended warranties for white goods are focused mostly on cover for breakdown 18
Independent distribution channels 19
Several independent extended warranty options are available to US consumers 19
… and 'home warranties' are important in the context of the white goods market 19
Market value for extended warranties and insurance 20
Market forecasts to 2016 21
The white goods market is forecast to experience modest growth through to 2016… 21
which will help boost the market for extended warranties 22

3.0 BROWN GOODS 23

Introduction 23
Underlying market value and volume 24
The value and volume of sales of brown goods both declined between 2008 and 2012 24
Manufacturers' original warranty length and consumer law 25
Almost all manufacturers of brown goods offer only a one-year original warranty 25
Manufacturer schemes for extended warranties and insurance 26
Most manufacturers with extended warranty schemes administer these internally 26
Retailer schemes for extended warranties and insurance 28
Over two thirds of retail chains selling brown goods promote related extended warranties 28
…with the partnerships very similar to those observed for warranties for white goods 28
SquareTrade provides coverage for several national retailers… 28
…while Best Buy and its subsidiary use Chartis in addition to in-house service provision 28
Risk coverage of all schemes for extended warranties and insurance 30
Around one in ten extended warranty schemes for brown goods include cover for accidental damage 30
Independent distribution channels 30
Market value for extended warranties and insurance 31
Market forecasts to 2016 32
The US market for brown goods is predicted to return to growth between 2012 and 2016 32
…which should simultaneously drive progress in the related market for extended warranties 33

4.0 GREY GOODS 34

Introduction 34
Underlying market value and volume 35
The value and volume of the grey goods market were both broadly flat between 2008 and 2012 35
Manufacturers' original warranty length and consumer law 36
Several manufacturers offer multi-year warranties for grey goods in the US 36
Manufacturer schemes for extended warranties and insurance 37
The vast majority of manufacturers run internally-managed extended warranty schemes 37
Retailer schemes for extended warranties and insurance 39
Retailer extended warranty schemes for grey goods are similar to those for brown goods… 39
…with the details of retailers using external partners essentially identical 39
Around a quarter of retailers opt to manage some or all of their schemes internally 39
Risk coverage of all schemes for extended warranties and insurance 41
Nearly one in four extended warranty schemes includes cover for accidental damage 41
Independent distribution channels 41
Specialist independent schemes exist for particular customer groups such as students and teachers 41
Market value for extended warranties and insurance 42
Market forecasts to 2016 43
The market for grey goods is forecast to decline between 2012 and 2016 43
…which is likely to translate into a contraction of the associated extended warranty market 44

5.0 MOBILE GADGETS 45

Introduction 45
Underlying market value and volume 46
The US mobile gadget market value increased by over 40% between 2008 and 2012 46
Manufacturers' original warranty length and consumer law 47
Most mobile gadget manufacturer warranties are restricted to a duration of one year 47
Manufacturer schemes for extended warranties and insurance 48
Just over a half of manufacturers of mobile gadgets surveyed offer an extended warranty 48
Service Net has multiple partnerships with manufacturers in this sphere 48
…although most manufacturers operate internally-managed schemes 48
Retailer schemes for extended warranties and insurance 50
About three quarters of retailers offering extended warranties rely on an external partner… 50
…with NEWAsurion the most commonly named insurance provider… 50
…although AmTrust and SquareTrade both hold a number of important partnerships 50
Mobile networks and specialist mobile retailers have introduced new names to mobile gadget insurance 50
including the Mobile Device Protection Association 50
Risk coverage of all schemes for mobile gadget insurance 52
More than half of schemes cover accidental damage but few cover loss or theft 52
Independent distribution channels 52
Multiple third-party protection schemes are found for mobile gadgets in the US… 52
and the concept of personal possessions insurance is also present 53
Market value for extended warranties and insurance 53
Market forecasts to 2016 54
Both the value and volume of the mobile gadget market will continue to see strong growth through to 2016 54
…with the corresponding extended warranty and insurance market forecast to grow commensurately 55

6.0 MOBILE PHONES 56

Introduction 56
Underlying market volumes 57
The volume of mobile phone subscriptions has increased by a third in recent years 57
while the number of individuals in possession of a mobile phone has also risen 58
Manufacturers' original warranty length and consumer law 59
Only one manufacturer of mobile phones offers an original warranty of longer than one year 59
Manufacturer schemes for mobile phone insurance 60
Manufacturer extended warranty or insurance programs are less common in the case of mobile phones 60
Retailer schemes for mobile phone insurance 62
Well over half of retailers of mobile phones offer some sort of extended protection 62
with a mobile telephone specialist joining familiar warranty and insurance firms… 62
…as well as a mobile insurance captive owned by a wireless technology retail specialist 62
All 11 non-virtual operators surveyed offered some type of mobile handset insurance… 62
…with NEWAsurion demonstrating a notable lead in market share in this segment 62
Risk coverage of all schemes for mobile phone insurance 65
Coverage for airtime abuse is not a feature of mobile phone protection in the US 65
Independent distribution channels 66
Mobile handset owners in the US can acquire protection from a variety of independent sources 66
Market value for mobile phone insurance 67
Market forecasts to 2016 68
The growth in mobile phone subscriptions will continue between 2012 and 2016 68
which would equate to a mobile handset penetration rate among consumers nearly reaching 75% 69
Increasing handset penetration should help buoy the market for mobile phone cover 70



LIST OF GRAPHICS / TABLES

0.0 EXECUTIVE SUMMARY 1

Approximate market value for extended warranties and insurance linked to mobile and non-mobile consumer products in the US, 2012 and 2016 (forecast) 2

1.0 INTRODUCTION 3

Organisations researched in the US, segmented by type, 2012 4
Retailers in the US segmented by distribution channel, 2012 5

2.0 WHITE GOODS 10

Value and volume of sales of white goods in the US, 2008 and 2012 11
Comparative length of original warranties offered by manufacturers of white goods in the US, 2012 12
Manufacturer schemes for extended warranties and insurance linked to white goods in the US: provision rates, operating models and provider share of non-captive partnerships, 2012 14
Retailer schemes for extended warranties and insurance linked to white goods in the US: provision rates, operating models and provider share of non-captive partnerships, 2012 17
Risk coverage of all schemes for extended warranties and insurance linked to white goods in the US, 2012 18
Approximate market value for extended warranties and insurance linked to white goods in the US, 201220
Value and volume of sales of white goods in the US, 2012 and 2016 (forecast) 21
Forecast market value for extended warranties and insurance linked to white goods in the US, 2016 22

3.0 BROWN GOODS 23

Value and volume of sales of brown goods in the US, 2008 and 2012 24
Comparative length of original warranties offered by manufacturers of brown goods in the US, 2012 25
Manufacturer schemes for extended warranties and insurance linked to brown goods in the US: provision rates, operating models and provider share of non-captive partnerships, 2012 27
Retailer schemes for extended warranties and insurance linked to brown goods in the US: provision rates, operating models and provider share of non-captive partnerships, 2012 29
Risk coverage of all schemes for extended warranties and insurance linked to brown goods in the US, 2012 30
Approximate market value for extended warranties and insurance linked to brown goods in the US, 2012 31
Value and volume of sales of brown goods in the US, 2012 and 2016 (forecast) 32
Forecast market value for extended warranties and insurance linked to brown goods in the US, 2016 33

4.0 GREY GOODS 34

Value and volume of sales of grey goods in the US, 2008 and 2012 35
Comparative length of original warranties offered by manufacturers of grey goods in the US, 2012 36
Manufacturer schemes for extended warranties and insurance linked to grey goods in the US: provision rates, operating models and provider share of non-captive partnerships, 2012 38
Retailer schemes for extended warranties and insurance linked to grey goods in the US: provision rates, operating models and provider share of non-captive partnerships, 2012 40
Risk coverage of all schemes for extended warranties and insurance linked to grey goods in the US, 2012 41
Approximate market value for extended warranties and insurance linked to grey goods in the US, 2012 42
Value and volume of sales of grey goods in the US, 2012 and 2016 (forecast) 43
Forecast market value for extended warranties and insurance linked to grey goods in the US, 2016 44

5.0 MOBILE GADGETS 45

Value and volume of sales of mobile gadgets in the US, 2008 and 2012 46
Comparative length of original warranties offered by manufacturers of mobile gadgets in the US, 2012 47
Manufacturer schemes for extended warranties and insurance linked to mobile gadgets in the US:
provision rates, operating models and provider share of non-captive partnerships, 2012 49
Retailer schemes for extended warranties and insurance linked to mobile gadgets in the US: provision rates, operating models and provider share of non-captive partnerships, 2012 51
Risk coverage of all schemes for mobile gadget insurance in the US, 2012 52
Approximate market value for extended warranties and insurance linked to mobile gadgets in the US, 2012 53
Value and volume of sales of mobile gadgets in the US, 2012 and 2016 (forecast) 54
Forecast market value for extended warranties and insurance linked to mobile gadgets in the US, 2016 55

6.0 MOBILE PHONES 56

Volume of mobile phone subscriptions and subscriptions per capita in the US, 2008 and 2012 57
Number of individuals owning a mobile phone in the US and their weighting within the total population, 2008 and 2012 58
Comparative length of original warranties offered by manufacturers of mobile phones in the US, 2012 59
Manufacturer schemes for mobile phone insurance in the US: provision rates, operating models and provider share of non-captive partnerships, 2012 61
Retailer schemes for mobile phone insurance in the US: provision rates, operating models and provider share of non-captive partnerships, 2012 64
Risk coverage of all schemes for mobile phone insurance in the US, 2012 65
Approximate market value and policies in force for mobile phone insurance in the US, 2012 67
Volume of mobile phone subscriptions and subscriptions per capita in the US, 2012 and 2016 (forecast) 68
Number of individuals owning a mobile phone in the US and their weighting within the total population, 2012 and 2016 (forecast) 69
Forecast market value and policies in force for mobile phone insurance in the US, 2016 70

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