When pushed to buy insurance for our devices, we often brush off the offer only to realize too late that it may have been a good idea. Replacing an iPhone screen can cost as much as US$329, a laptop keyboard US$195, and obviously more if you lose the device completely. According to a Consumer Reports survey, more than 50% of people break their phone in two years—not a surprise considering the average person drops their phone four times a week. The average selling price of a smartphone in North America is US$665 and only getting higher, which begs the question that if we’re getting insurance on our cars and health, why not our devices?
It makes sense to get insurance on our mobile phones, especially considering we now hold onto them longer and insurance is largely affordable. One can get coverage from damage, loss and theft for as low as US$4 to $10 per month. Cognizant of the market opportunity, many companies now offer such insurance products, including large insurance companies like AIG and AXA, telecommunications companies like Deutsche Telecom and AT&T, as well as banks and credit card companies. The global mobile phone insurance market of US$26bn in 2021 is expected to grow at a compound annual rate of 13% from 2021 to 2028. The addressable market is expanding further as consumers look to insure their tablets, laptops, wearables and even game consoles. With the advent of 5G, the number of connected devices are increasing, and the types of value-add services (VAS) we need are growing alongside. This includes protection, trade-in/upgrades, service & repair, and customer support. With 5G devices becoming more expensive, consumer willingness to purchase insurance or extended warranties has increased.
Just as much as such insurers are benefiting from 5G, they are also helping promote it; 70% of consumers said they would be more likely to move ahead with the purchase of a connected device if they had VAS. Moreover, trade-in offers will play a critical role in overcoming the price barrier for upgrading or buying new devices entirely, such as smart refrigerators, home speakers or security systems. While frustration or fear remains regarding adopting a connected ecosystem at home, these insurers are there to help make the most of our connected experiences from purchase to end-of-service.
We are positive on such insurance providers given the expandability of the addressable market. Adoption of connected technology is at a historic high, and our dependence on devices for life, work and play will only grow. Ultimately, device owners just want trustworthy and reliable service providers that can offer convenience and one-stop services. Companies including Asurion, Progressive and SquareTrade offer such services, but we think Assurant is best positioned given its extensive product offerings, market leadership and global partnerships.
More Connected Devices Than Ever
Source: IOT Analytics, Global IoT Market Forecast.
Assurant
Assurant is a U.S.-based specialty insurance company and leader in mobile device insurance with 20% global market share. The company services 300m people around the world with innovative products that help protect and support the major purchases they make, including smartphones, appliances, homes and cars. Key partnerships include Verizon, Apple, Best Buy, Vodafone and KDDI in Japan.
Assurant aspires to be a premier provider of lifestyle and housing solutions that supports the increasingly connected lifestyle of consumers. Global Lifestyle accounts for 80% of sales, and much of the growth comes from the smartphone business, which serves more than 63m customers across 21 countries. Assurant provides insurance and value-add services such as data protection, warranty and repair that are sold to consumers through exclusive partnerships with retailers, operators and manufacturers. Companies value Assurant as it helps them minimize risk, maximize revenue and deliver exceptional customer experience on their behalf. It’s no surprise that Assurant has an extensive and growing partnership list that includes the top three U.S. wireless carriers, top two global smartphone makers and seven of the world’s top 15 retailers.
In addition to an exclusive relationship with T-Mobile in the U.S., the company is also expanding quickly overseas via partners Vodafone in Europe, and KDDI and Rakuten in Japan. The acquisition of HYLA Mobile in 2020 helps further segment growth by adding scale and technology capabilities to the company’s global trade-in and upgrade business. Assurant now provides 30 trade-in programs across the world, which allows them to better benefit from the ongoing 5G smartphone upgrade cycle. Moreover, the recent acquisition of Fixt grants them access to over 1,000 local repair stores across the US. Assurant continues to adapt its business portfolio and capabilities to respond to client and customer needs, and we are optimistic given a growing array of fee-based services that complement its insurance offerings and reduce capital intensity.
Please contact your NB representative with any questions or for additional information.
