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

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

Published OnJan, 2016
Pages74
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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 go

0.0 EXECUTIVE SUMMARY ...... 1
1.0 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
2.0 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 & 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
3.0 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 & 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
4.0 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
5.0 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
6.0 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 Hippo.co.za 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
0.0 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
1.0 INTRODUCTION ........ 3
Organisations researched in South Africa, segmented by type, 2015 ..... 4
Retailers researched in South Africa segmented by distribution channel, 2015  6
2.0 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
3.0 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
4.0 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
5.0 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 .. 56
Value and volume of sales of mobile gadgets in South Africa, 2015 and 2019 (forecast) ..... 57
Approximate market value for extended warranties and insurance linked to mobile gadgets in South Africa, 2015 and 2019 (forecast) ........ 58
6.0 MOBILE PHONES .... 59
Volume of mobile phone subscriptions and subscriptions per capita in South Africa, 2011 and 2015 ....... 60
Number of individuals owning a mobile phone in South Africa and their weighting within the total population, 2011 and 2015 ..... 61
Comparative length of original warranties offered by manufacturers of mobile phones in South Africa, 2015 ........ 62
Manufacturer schemes for extended warranties and insurance linked to mobile phones in South Africa: provision rates and operating models, 2015  63
Manufacturer schemes for extended warranties and insurance linked to mobile phones in South Africa: unweighted and weighted provider share of partnerships, 2015 . 64
Retailer schemes for extended warranties and insurance linked to mobile phones in South Africa: provision rates and operating models, 2015  65
Retailer schemes for extended warranties and insurance linked to mobile phones in South Africa: unweighted and weighted provider share of partnerships, 2015 . 67
Manufacturer and retailer schemes for extended warranties and insurance linked to mobile phones in South Africa: combined analysis of weighted provider share of partnerships, 2015 ... 68
Risk coverage of all schemes for extended warranties and insurance linked to mobile phones in South Africa, 2015 ........ 69
Approximate market value and policies in force for extended warranties and insurance linked to mobile phones in South Africa, 2011 and 2015 ....... 71
Volume of mobile phone subscriptions and subscriptions per capita in South Africa, 2015 and 2019 (forecast) . 72
Number of individuals owning a mobile phone in South Africa and their weighting within the total population, 2015 and 2019 (forecast) .......... 73
Approximate market value and policies in force for extended warranties and insurance linked to mobile phones in South Africa, 2015 and 2019 (forecast) . 74

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