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

  • ID: 2495693
  • Report
  • Region: Africa, South Africa
  • 74 Pages
  • Finaccord
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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?
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0.0 EXECUTIVE SUMMARY

1.0 INTRODUCTION

What is this report about?

Rationale

The market for extended warranties and insurance for consumer products has been little studied

Evolving distribution channels both favour and compromise extended warranty provision

Methodology

Manufacturer and retailer survey

The survey's scope covers 135 manufacturers and retailers of mobile and non-mobile consumer products

Market data

Distribution channels for retailers

Most distributors of consumer electronics in South Africa operate offline-only or mixed retail models

Definitions

Extended warranties and insurance

Extended warranties and insurance linked to consumer products come in a variety of formats…

…and are frequently marketed to consumers under alternative titles

Premiums and other revenues

Operating models

PartnerBASE™ and market data annexe

Finaccord

2.0 WHITE GOODS

Introduction

Underlying market value and volume

The value and volume of sales of white goods has increased modestly in recent years

Manufacturers' original warranty length and consumer law

More than half of manufacturers offer only one-year warranties for white goods

Manufacturer schemes for extended warranties and insurance

Two manufacturers of white goods in South Africa have developed an extended warranty program...

Retailer schemes for extended warranties and insurance

... although 16 retailers of white goods have done so...

... with MasterCare identifiable as the most frequently-used warranty and service specialist...

... and with Hollard Insurance and Mutual & Federal also acting as external providers

A significant proportion of retailers with schemes run these on a captive or internal basis

MasterCare faced a number of serious organisational difficulties during 2012

Risk coverage of all schemes for extended warranties and insurance

Extended warranties for white goods are focused mostly on cover for breakdown

Independent distribution channels

Owners of white goods can also acquire extended warranties from at least two independent sources

Market value for extended warranties and insurance

Market forecasts to 2016

The white goods market is forecast to experience significant growth through to 2016…

...which will help boost the market for extended warranties

3.0 BROWN GOODS

Introduction

Underlying market value and volume

The value and volume of sales of brown goods has remained broadly flat in recent years

Manufacturers' original warranty length and consumer law

South African law guarantees goods for a minimum of six months

Manufacturer schemes for extended warranties and insurance

The prevalence of retailer schemes provides an obstacle to the development of manufacturer programs

Retailer schemes for extended warranties and insurance

Over a third of retail chains selling brown goods promote related extended warranties...

…with the partnerships very similar to those found observed for warranties for white goods

Risk coverage of all schemes for extended warranties and insurance

Few extended warranty schemes for brown goods include cover for accidental damage

Independent distribution channels

Market value for extended warranties and insurance

Market forecasts to 2016

South Africa's market for brown goods is predicted to return to modest growth...

…which should simultaneously drive progress in the related market for extended warranties

4.0 GREY GOODS

Introduction

Underlying market value and volume

South Africa's grey goods market value declined slightly between 2008 and 2012

Manufacturers' original warranty length and consumer law

Several manufacturers offer multi-year warranties for grey goods in South Africa

Manufacturer schemes for extended warranties and insurance

Ten manufacturers run internally-managed extended warranty schemes

Retailer schemes for extended warranties and insurance

Retailer extended warranty schemes for grey goods are similar to those for brown goods…

…with the addition of a specialised program run by Core Group, Apple's official distributor

Risk coverage of all schemes for extended warranties and insurance

One in four extended warranty schemes include cover for accidental damage

Independent distribution channels

Market value for extended warranties and insurance

Market forecasts to 2016

The market for grey goods is forecast to continue its decline between 2012 and 2016...

…which is likely to translate into a contraction of the associated extended warranty market

5.0 MOBILE GADGETS

Introduction

Underlying market value and volume

South Africa's mobile gadget market value increased by nearly a half between 2008 and 2012

Manufacturers' original warranty length and consumer law

Mobile gadget manufacturer warranties are mostly restricted to a duration of one year

Manufacturer schemes for extended warranties and insurance

Manufacturers with extended warranty schemes in South Africa tend to manage these internally

Retailer schemes for extended warranties and insurance

A majority of retailers of mobile gadgets in South Africa offer extended warranty or insurance cover

Risk coverage of all schemes for mobile gadget insurance

Almost all schemes cover mechanical breakdown but few cover loss or theft

Independent distribution channels

Several independent options exist for stand-alone mobile gadget cover, especially for laptops...

... and the concept of personal possessions insurance is also present in South Africa

Market value for extended warranties and insurance

Market forecasts to 2016

Both the value and volume of the mobile gadget market will continue rising quickly through to 2016...

…with the corresponding extended warranty and insurance market forecast to grow commensurately

6.0 MOBILE PHONES

Introduction

Underlying market volumes

The volume of mobile phone subscriptions has increased by more than 30% in recent years

...while the number of individuals in possession of a mobile phone has also risen

Manufacturers' original warranty length and consumer law

Only one manufacturer of mobile phones offers an original warranty of longer than one year

Manufacturer schemes for mobile phone insurance

Manufacturer extended warranty or insurance programs are entirely absent in the case of mobile phones

Retailer schemes for mobile phone insurance

At least 20 mobile operator or retailer insurance programs exist in South Africa...

... and at least six specialist insurance providers are active in this context

The three active mobile networks offering cover all maintain different models of provision

Risk coverage of all schemes for mobile phone insurance

13 policies resemble extended warranties while seven offer more fully-fledged insurance cover

Independent distribution channels

A significant number of independent schemes are available for mobile phone cover in South Africa...

... including one underwritten by Hollard Insurance on behalf of brands owned by the Edcon group

Market value for mobile phone insurance

Market forecasts to 2016

The growth in mobile phone subscriptions will continue between 2012 and 2016...

...which would equate to a mobile handset penetration rate among consumers reaching 77%

Increasing handset penetration and insurance take-up should help buoy the market for mobile phone cover

LIST OF GRAPHICS / TABLES

TABLE OF CONTENTS

0.0 EXECUTIVE SUMMARY

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

1.0 INTRODUCTION

Organisations researched in South Africa, segmented by type, 2012

Retailers in South Africa, segmented by distribution channel, 2012

2.0 WHITE GOODS

Value and volume of sales of white goods in South Africa, 2008 and 2012

Comparative length of original warranties offered by manufacturers of white goods in South Africa, 2012

Manufacturer schemes for extended warranties and insurance linked to white goods in South Africa: provision rates and operating models, 2012

Retailer schemes for extended warranties and insurance linked to white goods in South Africa: provision rates, operating models and provider share of non-captive partnerships, 2012

Risk coverage of all schemes for extended warranties and insurance linked to white goods in South Africa, 2012

Approximate market value for extended warranties and insurance linked to white goods in South Africa, 2012

Value and volume of sales of white goods in South Africa, 2012 and 2016 (forecast)

Forecast market value for extended warranties and insurance linked to white goods in South Africa, 2016

3.0 BROWN GOODS

Value and volume of sales of brown goods in South Africa, 2008 and 2012

Comparative length of original warranties offered by manufacturers of white goods in South Africa, 2012

Manufacturer schemes for extended warranties and insurance linked to brown goods in South Africa: provision rates and operating models, 2012

Retailer schemes for extended warranties and insurance linked to brown goods in South Africa: provision rates, operating models and provider share of non-captive partnerships, 2012

Risk coverage of all schemes for extended warranties and insurance linked to brown goods in South Africa, 2012

Approximate market value for extended warranties and insurance linked to brown goods in South Africa, 2012

Value and volume of sales of brown goods in South Africa, 2012 and 2016 (forecast)

Forecast market value for extended warranties and insurance linked to brown goods in South Africa, 2016

4.0 GREY GOODS

Value and volume of sales of grey goods in South Africa, 2008 and 2012

Comparative length of original warranties offered by manufacturers of grey goods in South Africa, 2012

Manufacturer schemes for extended warranties and insurance linked to grey goods in South Africa: provision rates and operating models, 2012

Retailer schemes for extended warranties and insurance linked to grey goods in South Africa: provision rates, operating models and provider share of non-captive partnerships, 2012

Risk coverage of all schemes for extended warranties and insurance linked to grey goods in South Africa, 2012

Approximate market value for extended warranties and insurance linked to grey goods in South Africa, 2012

Value and volume of sales of grey goods in South Africa, 2012 and 2016 (forecast)

Forecast market value for extended warranties and insurance linked to grey goods in South Africa, 2016

5.0 MOBILE GADGETS

Value and volume of sales of mobile gadgets in South Africa, 2008 and 2012

Comparative length of original warranties offered by manufacturers of grey goods in South Africa, 2012

Manufacturer schemes for extended warranties and insurance linked to mobile gadgets in South Africa: provision rates and operating models, 2012

Retailer schemes for extended warranties and insurance linked to mobile gadgets in South Africa: provision rates, operating models and provider share of non-captive partnerships, 2012

Risk coverage of all schemes for mobile gadget insurance in South Africa, 2012

Approximate market value for extended warranties and insurance linked to mobile gadgets in South Africa, 2012

Value and volume of sales of mobile gadgets in South Africa, 2012 and 2016 (forecast)

Forecast market value for extended warranties and insurance linked to mobile gadgets in South Africa, 2016

6.0 MOBILE PHONES

Volume of mobile phone subscriptions and subscriptions per capita in South Africa, 2008 and 2012

Number of individuals owning a mobile phone in South Africa and their weighting within the total population, 2008 and 2012

Comparative length of original warranties offered by manufacturers of mobile phones in South Africa, 2012

Retailer schemes for mobile phone insurance in South Africa: provision rates, operating models and provider share of non-captive partnerships, 2012

Risk coverage of all schemes for mobile phone insurance in South Africa, 2012

Approximate market value and policies in force for mobile phone insurance in South Africa, 2012

Volume of mobile phone subscriptions and subscriptions per capita in South Africa, 2012 and 2016 (forecast)

Number of individuals owning a mobile phone in South Africa and their weighting within the total population, 2012 and 2016 (forecast)

Forecast market value and policies in force for mobile phone insurance in South Africa, 2016
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