Global Mobile Phone Insurance Market Outlook, 2029

Global Mobile Phone Insurance Market Outlook, 2029

In today's digital age, mobile phones have become an indispensable part of the lives. From communication and entertainment to managing finances and accessing critical information, our reliance on these devices is undeniable. However, with their high value and frequent use, mobile phones are also prone to damage, loss, and theft. This is where mobile phone insurance comes into play. Mobile phone insurance is a policy that provides coverage for the phone against various risks such as accidental damage, theft, loss, and sometimes even mechanical breakdowns outside the manufacturer's warranty. The specifics of the coverage can vary widely depending on the provider and the policy. Mobile phones serve as a platform for entertainment and education and an effective platform for conducting digital transactions. Increasing the use of smartphones for storing personal information and digital transactions has led to the increasing need for safeguarding mobile devices. This trend is expected to escalate market growth over the forecast period. According to GSMA (Global System for Mobile Communications Association), approximately 75% of internet users are expected to access the internet through smartphones by 2025. Mobile phone insurance service providers are collaborating with smartphone manufacturers to experiment with the success rate of insurance policies/schemes offered when purchasing a mobile phone. The ease of availability and portability of a smartphone has made it one of the most preferred devices across the globe. Smartphones offer a wide range of applications and, therefore, have a high penetration level. Mobile phones were initially used for making calls and sending messages. However, with the introduction of smartphones, the capabilities of phones have extended to video calling, social media browsing, banking, and high-resolution gaming, among others. Mobile phone owners often express concerns about the safety of their phones after the expiration of their warranty. The costs associated with repairing and maintaining damaged smartphones prove to be expensive after the warranty expires. Providing insurance coverage for smartphones saves a lot of money for consumers as the burden of repair costs is delegated to insurance providers. This is expected to boost the growth of the market over the forecast period.

According to the research report, “Global Mobile Phone Insurance Market Outlook, 2029” published by Bonafide Research, the market is anticipated to cross USD 50 Billion by 2029, increasing from USD 33.55 Billion in 2023. The market is expected to grow with 8.28% CAGR by 2024-29. Increasing incidents of accidental damage, phone thefts, virus infection, and device malfunction are expected to drive market growth over the forecast period. These incidents have urged customers to look for ways to safeguard their mobile phones and, thereby, adopt mobile phone coverage policies. Mobile phone insurance helps consumers avoid high replacement costs in case their mobile phone is lost or faces a breakdown. A mobile phone insurance policy typically covers physical damage, internal coverage failure, theft & loss protection, and virus & data protection. Mobile phones are highly susceptible to physical and technical damages, such as damaged casing and excessive dust and dirt, which may harm the Printed Circuit Board (PCB) and coverages. Such damages may also incur enormous losses for users and are expected to increase the demand for mobile phone insurance over the forecast period. The increasing costs of smartphones are also compelling consumers to opt for mobile phone coverage policies. Furthermore, the growing collaborations among mobile phone manufacturers and insurance providers are also anticipated to drive market growth over the forecast period. Moreover, direct-to-consumer insurance assistance is expected to create substantial growth opportunities for market players over the forecast period. The direct-to-consumer insurance assistance model provides improved customer experience instead of insurance selling through traditional distribution channels. The COVID-19 pandemic highly affected the mobile phone/smartphone market. While most of the companies operating in the market reported revenue decline from the mobile phone insurance domain, the sales of smartphones also witnessed a significant dip in the market. However, with the growing initiatives taken by governments across the globe to revive the economy, the market is anticipated to recover over the coming years. Additionally, the average life span of a smartphone is expected to rise, which, in turn, will positively impact the market over the forecast period.

Mobile phones often come with a warranty to cover the costs of repairing mechanical breakdowns, internal disk crashes, or damages caused by touch sensors, among others. Manufacturers or retailers usually offer a one-year limited warranty, which an additional fee can extend. However, since the terms and conditions associated with the warranty coverage are stringent and limited, many a time, customers end up bearing the cost of replacing damaged parts. For instance, any liquid damage caused to a cell phone is usually not covered under the manufacturer’s warranty. As a result, customers favor insurance over warranty, as mobile phone insurance offers various customer-friendly insurance plans with a broader scope. The increasing number of mobile phone manufacturers and users has unfolded numerous opportunities for insurance companies to lure customers into opting for cell phone insurance plans. Moreover, as the lifecycle of cell phones is increasing with time, warranties with limited coverage would not be able to satiate the growing customer needs, thereby paving the way for mobile phone insurers to lead the market. Mobile phone insurance is called service contract, which provides component fix repair service for phones sold by retailers, and service providers. It often provides additional coverage of phones such as unauthorized usage, malicious damage, e-wallet payments, or theft. Mobile phone insurance also covers the cost and inconvenience of mechanical and electrical failures. Factors such as increase in incidents of accidental damage, phone thefts, virus infection, & device malfunction, and surge in adoption of high quality smartphones are some of the major factors, which drive the mobile phone insurance market growth. In addition, high replacement cost of various parts of mobile phones boost mobile phone insurance market growth. However, decline in sale of mobile phones is a major restraint that hinders the growth of the market. On the contrary, surge in demand for innovative products is expected to boost the market growth in the future.

Market Drivers

• Increasing Incidence of Phone Damage and Theft: As the number of smartphone users grows, so too does the incidence of phone damage and theft. This is a significant driver for the mobile phone insurance industry. People are increasingly recognizing the risk and potential cost of these incidents and are seeking insurance as a way to mitigate this risk. Factors contributing to this trend include the increasing use of smartphones in public places, the high resale value of these devices, and the active lifestyles of many users.
• Growing Demand for Extended Warranties: Many consumers are interested in extended warranties that go beyond the manufacturer's standard coverage. This is another significant driver for the mobile phone insurance industry. Standard warranties typically only cover manufacturing defects and last for a limited period of time (usually one year). In contrast, mobile phone insurance can cover a wider range of issues, including accidental damage, theft, and loss, for a longer period of time. This provides consumers with greater peace of mind and protection for their investment. Factors contributing to this trend include the increasing complexity and cost of smartphones, the desire of consumers to keep their devices for longer, and the growing recognition of the limitations of standard warranties.

Market Challenges

• Lack of Awareness and Understanding: This is a significant challenge for the mobile phone insurance industry. Many consumers are either unaware of the existence of such insurance or do not fully understand what it covers. This can lead to a lack of interest or dissatisfaction if a claim is denied due to misinformation. Insurance providers need to invest in clear, concise, and widespread education about their products.
• Claims Process Complexity: The process of filing and receiving a claim can be complex and time-consuming. This can lead to frustration and dissatisfaction among customers, potentially damaging the reputation of the insurance provider. To overcome this, providers are working on simplifying and digitizing the claims process, making it more user-friendly and efficient.

Market Trends

• Digitalization of Insurance Services: The digitalization of insurance services is a significant trend in the mobile phone insurance industry. This includes the ability to purchase, manage, and claim insurance policies online or through a mobile app. This trend is driven by the growing preference for contactless and remote services, especially in the wake of the COVID-19 pandemic.
• Bundling of Services: Bundling insurance with the purchase of a phone, a service contract, or other products is a common and growing trend. This can be beneficial for both consumers, who may get a better deal or find it more convenient, and for providers, who can broaden their customer base.

The premium phones segment is estimated to dominate the Mobile Phone Insurance Market. The substantial cost of these devices and data security concerns collectively are projected to drive the demand for mobile phone insurance in the premium mobile phone segment, enabling the segment to hold a dominant position in the market.

The high cost of repair and replacement for premium smartphones drives the demand for comprehensive mobile phone insurance coverage. Premium smartphones, such as the latest iPhone or Samsung Galaxy models, come with advanced technology, superior build quality, and high price tags, often exceeding $1,000. The intricate components, such as high-resolution displays, sophisticated camera systems, and powerful processors, make these devices both valuable and expensive to repair or replace. As a result, owners of premium smartphones are more inclined to purchase insurance to safeguard their significant investment against potential risks like accidental damage, theft, or loss. The cost of fixing a cracked screen or replacing a stolen device can be prohibitively high, prompting users to seek insurance for financial protection and peace of mind. Moreover, the comprehensive coverage offered by mobile phone insurance policies, including protection against mechanical failures and unauthorized usage, further appeals to premium smartphone owners who depend heavily on their devices for both personal and professional use. Consequently, the perceived value and vulnerability of premium smartphones make insurance a prudent choice, driving the demand in the mobile phone insurance market. Premium phones segment held the largest share. Premium smartphones often experience technical malfunctions, and users face potential losses due to issues such as theft and hardware damage. Repairing such damages and maintaining these high-end phones can result in significant expenses for users. These factors are anticipated to drive the adoption of mobile phone insurance among premium smartphone users.

The high frequency and significant cost of repairing physical damage to smartphones drive the demand for mobile phone insurance policies that include physical damage coverage.

Smartphones are essential, everyday devices that are frequently exposed to physical risks such as drops, spills, and impacts. These accidents can lead to cracked screens, damaged casings, and malfunctioning components, which are among the most common and costly repairs. Given the sleek designs and sophisticated technology embedded in modern smartphones, even minor physical damage can result in expensive repair bills. For instance, replacing a shattered screen on a premium smartphone can cost hundreds of dollars. The high probability of such incidents occurring, combined with the significant financial burden of repairs, makes physical damage coverage an attractive and practical option for consumers. Insurance policies that cover physical damage offer users a safeguard against the unpredictability of daily mishaps, ensuring that they can quickly and affordably repair or replace their devices without facing substantial out-of-pocket expenses. This assurance of financial protection and the convenience of accessing professional repair services make physical damage coverage a leading component of mobile phone insurance policies. As smartphones become more integral to both personal and professional life, the importance of maintaining their functionality and appearance drives the market demand for insurance that specifically addresses the frequent and costly issue of physical damage. Physical damage protection is the most prominent damage protection plan insured by most users since mobile phone devices are highly prone to physical damages such as cracks in the circuit board, screen damage, and so on. Therefore, in recent years, several mobile phone insurance companies have started offering insurance coverage for such damages under physical damage plans, which help users avoid paying huge amounts for repair and maintenance.

The high penetration of premium smartphones and the strong consumer awareness and demand for financial protection against mobile phone risks drive North America's leadership in the mobile phone insurance market.

North America, particularly the United States and Canada, is characterized by a high penetration of premium smartphones, with consumers frequently adopting the latest models from leading manufacturers like Apple and Samsung. The region's affluent consumer base tends to invest heavily in these high-end devices, which come with substantial purchase prices and repair costs. Additionally, there is a strong cultural emphasis on safeguarding valuable assets through insurance, bolstered by effective marketing strategies from insurance providers and telecom companies. These companies often bundle mobile phone insurance with other services, making it convenient for consumers to opt-in. Furthermore, North American consumers exhibit a high level of awareness regarding the risks associated with smartphone ownership, such as accidental damage, theft, and loss, and the significant financial impact these risks can have. This awareness translates into a robust demand for insurance products that offer comprehensive coverage, ensuring that their valuable devices are protected. The region's advanced digital infrastructure and competitive insurance market also contribute to the availability and accessibility of diverse and tailored insurance plans, further driving market growth. In North America, flagship phones generally cost more than $1,000, making them a substantial commitment for customers. This financial expenditure along with their disposable income is facilitating the consumers to protect their device through the adoption of mobile phone insurance, creating a pool of prospects for the market. The rising inclination toward online banking and e-commerce in this region has resulted in an increase in data breaches. Thereby, increasing demand for mobile phone insurance plans with data recovery or identity theft protection features, reflecting regional consumer priorities. Furthermore, effective targeted marketing campaigns in North America play a crucial role in educating the concerned consumer group. These campaigns highlight the risks associated with smartphone ownership and the benefits of having comprehensive insurance coverage, propelling the demand for mobile phone insurance in the North American region.

• In January 2024, CoverCloud, a growing insurtech business, announced its entry into the European market. This strategy hopes to capitalize on the region’s increasing need for flexible and affordable mobile phone insurance.
• In July 2023, Apple Inc. announced AppleCare+, an extended warranty plan that includes accidental damage coverage and 24/7 technical help. AppleCare+ can be purchased within 60 days of buying an iPhone in most nations and locations.
• In January 2023, AIG, a prominent insurance company, established a cooperation with Samsung to provide extended warranties and protection plans for Galaxy smartphones. This collaboration intends to offer full coverage for accidental damage, theft, and mechanical breakdowns.
• In July 20223, Apple introduced AppleCare+, an extended warranty plan offering accidental damage coverage and round-the-clock technical support. This service can be acquired within 60 days of iPhone purchase in most countries and regions.
• In December 2023, Assurant, another large insurance carrier, announced its new AI-powered claims processing platform. This technology uses machine learning to streamline the claims process, lowering wait times and increasing client satisfaction.

Considered in this report
• Historic year: 2018
• Base year: 2023
• Estimated year: 2024
• Forecast year: 2029

Aspects covered in this report
• Mobile Phone Insurance market Outlook with its value and forecast along with its segments
• Various drivers and challenges
• On-going trends and developments
• Top profiled companies
• Strategic recommendation

By Phone Type
• Premium smartphones
• Mid & high-end phones
• Budget phones

By Coverage
• Physical Damage
• Internal Component failure
• Theft & Loss Protection
• Others

The approach of the report:
This report consists of a combined approach of primary and secondary research. Initially, secondary research was used to get an understanding of the market and list the companies that are present in it. The secondary research consists of third-party sources such as press releases, annual reports of companies, and government-generated reports and databases. After gathering the data from secondary sources, primary research was conducted by conducting telephone interviews with the leading players about how the market is functioning and then conducting trade calls with dealers and distributors of the market. Post this; we have started making primary calls to consumers by equally segmenting them in regional aspects, tier aspects, age group, and gender. Once we have primary data with us, we can start verifying the details obtained from secondary sources.

Intended audience
This report can be useful to industry consultants, manufacturers, suppliers, associations, and organizations related to the Mobile Phone Insurance industry, government bodies, and other stakeholders to align their market-centric strategies. In addition to marketing and presentations, it will also increase competitive knowledge about the industry.
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