2020
9
UK Consumers and Gadget Insurance Market Report 2020
2020-08-27T15:47:36+01:00
OX988754
2195
123136
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Report
en_GB
“Gadget sales have been directly hit by COVID-19 due to lockdown restrictions in non-essential retailing and also as consumers take a more cautious approach to their finances. Gadget insurance will…

UK Consumers and Gadget Insurance Market Report 2020

£ 2,195 (Excl.Tax)

Report Summary

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Consumers and Gadget Insurance UK market including the behaviours, preferences and habits of the consumer.

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What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this report

There is considerable potential for providers to expand ownership of gadget insurance. Among those who do not have cover for their gadgets, 25% say that they would consider it in the future. Multigadget policies appear to have good potential, with those who own four or more gadgets more likely (38%) to consider gadget insurance in the future.

The COVID-19 outbreak will have a significant impact on the gadget insurance market. The discretionary nature of the product means that people could cut back on cover or trade down if they are faced with financial difficulties. Additionally, the market will be impacted by any slowdown in gadgets sales due to the economic consequences of the crisis and the increased caution towards non-essential expenditure.

Expert analysis from a specialist in the field

Written by Douglas Kitchen, a leading analyst in the Financial Services sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Gadget sales have been directly hit by COVID-19 due to lockdown restrictions in non-essential retailing and also as consumers take a more cautious approach to their finances. Gadget insurance will be directly impacted by this due to its heavy reliance on point-of-sale policies. Post-COVID-19, customers will be looking for additional value from their cover. Helping customers to maintain the trade-in value of devices is one area where insurers can demonstrate the longer-term value of cover.

Douglas Kitchen
Financial Services Analyst

Table of Contents

  1. Overview

    • What you need to know
    • Products covered in this Report
    • Key issues covered in this Report
    • COVID-19: Market context
    • Economic assumptions
  2. Executive Summary

    • The market
    • COVID-19 looks set to cause a sharp decline in sales in 2020
      • Figure 1: Estimated number of annual gadget insurance policy sales, 2016-20
    • COVID-19 will exacerbate the decline of the gadget insurance market…
    • …however, a return to normality and the introduction of 5G will trigger a partial recovery in sales
      • Figure 2: Volume forecast of gadget insurance policy sales, 2015-25
    • Over-50s represent a growing target market
      • Figure 3: Usage of the internet ‘on-the-go’, by device and age, 2019
    • Significant demand for 5G enabled technology
      • Figure 4: Intent to upgrade to a 5G device in next two years, January 2020
    • Extra regulatory focus on the mis-selling of gadget insurance
    • The impact of COVID-19
      • Figure 5: Expected impact of COVID-19 on gadget insurance, short, medium and long-term, 21 July 2020
    • Short-term
    • Medium-term
    • Long-term
    • Companies and brands
    • AXA enters the UK mobile and gadget insurance market
    • Post Office and HSBC offer flexibility
    • The consumer
    • Smartphones remain the key area for growth
      • Figure 6: Penetration of gadget insurance, by type of coverage and gadget, February 2020
    • A quarter would consider gadget insurance in the future
      • Figure 7: Consideration of gadget insurance, February 2020
    • People are looking for added convenience from their policy
      • Figure 8: Important gadget insurance policy features, February 2020
    • Significant interest in insuring lower-priced gadgets
      • Figure 9: Estimated value of gadgets worth paying insurance for, by gadget, February 2020
    • Point-of-sale remains crucial for gadget insurance sales
      • Figure 10: Time of gadget insurance purchase, February 2020
    • Helping customers realise the value of their gadgets should help to boost interest
      • Figure 11: Attitudes towards gadget insurance, February 2020
    • What we think
  3. The Impact of COVID-19 on Gadget Insurance

    • How COVID-19 will reshape the market
    • Sales will decline in 2020…
    • …but tech dependency is higher than during the last recession
    • Home-working and studying create engagement opportunities for providers
    • The impact of COVID-19 on consumers
    • Access to early upgrades will help convince Millennials looking for additional value
    • Increased smartphone ownership among the over-50s
    • How brands can respond to COVID-19
    • Increasing flexibility will be key…
    • …while highlighting the extra value on offer will be equally important
    • Adapting to the shift to online purchasing will be a challenge
  4. Issues and Insights

    • An emphasis on value-added benefits will be more important post COVID-19
    • The facts
    • The implications
    • Adapting to the new online retailing is a priority
    • The facts
    • The implications
  5. The Market – What You Need to Know

    • COVID-19 to cause a sharp decline in sales in 2020…
    • …however, a return to normality and the introduction of 5G will boost sales
    • Over-50s represent a growing target market
    • COVID-19 leads to a decline in gadget purchases
    • Significant demand for 5G enabled technology
    • A rise in home-working and studying will stall the decline of laptop sales
    • Extra focus on the mis-selling of gadget insurance
  6. Market Size and Forecast

    • Outlook in light of COVID-19
    • Short, medium and long-term impact on the industry
      • Figure 12: Expected impact of COVID-19 on gadget insurance, short, medium and long-term, 21 July 2020
    • A sharp drop in policy sales is predicted in 2020
    • Policy sales are estimated to have fallen for the fourth consecutive year in 2019
      • Figure 13: Estimated number of gadget insurance policy sales, 2016-20
    • Market Forecast
    • Context and approach to forecasting
    • COVID-19 will continue the decline of the gadget insurance market…
    • …but will also lead to people thinking more about their financial vulnerability
    • A return to normality and the introduction of 5G will boost sales
      • Figure 14: Volume forecast of gadget insurance policy sales, 2015-25
    • Lessons from the 2008 recession
  7. Market Drivers

    • Economy expected to return to pre-crisis size by late 2021
      • Figure 15: Annual GDP, 2007-24 (central forecast)
    • Unemployment is set to more than double during 2020
      • Figure 16: Annual unemployment rate, 2007-24
    • ‘On-the-go’ internet usage rises…
      • Figure 17: Usage of the internet ‘on-the-go’, by device, 2018 vs 2019
    • … and increases most among over-50s
      • Figure 18: Usage of the internet ‘on-the-go’, by device and age, 2019
    • COVID-19 impacts technology purchasing activity…
      • Figure 19: Technology products bought in the last three months, January 2020 vs April 2020
    • …with intentions to purchase also declining
      • Figure 20: Plans to buy technology products in the next 3 months, January 2020 vs April 2020
  8. Market Context: Smartphones

    • Smartphone sales fell for the fourth consecutive year in 2019…
    • …and is forecast to take a sharp decline in 2020
      • Figure 21: Estimated value of mobile phone sales in the UK, 2014-2024
  9. Market Context: Wearable Technology

    • Smartwatch sales drive an increase in sales of wrist-worn wearables
      • Figure 22: Estimated unit sales of wrist-worn wearable devices, 2017-19
    • Pre-COVID-19 interest in wearable technology was increasing
      • Figure 23: Intent to purchase wearable technology in the next 12 months, September 2018 vs August 2019
    • Post-COVID-19 focus on health and wellness will drive interest in wearable tech
  10. Market Context: Laptop and Tablet Computers

    • Home-working and studying will stall the decline in laptop sales
      • Figure 24: Market forecast for laptop computers, 2014-25
    • Tablet computer sales forecast to decline by 8% in 2020
      • Figure 25: Market forecast for tablet computers, 2014-24
  11. Competitor Products

    • Home content insurance sales have declined
      • Figure 26: Total written home contents and combined insurance policies and premiums, 2012-19
    • Extended warranties shift towards subscription services
  12. Regulatory and Legislative Changes

    • Gadget insurers avoid new regulation for customers paying the ‘loyalty penalty’
    • Extra regulatory focus on the mis-selling of gadget insurance…
    • …and electrical warranties
    • FCA continues to focus on transparency in the general insurance market
  13. Companies and Brands – What You Need to Know

    • AXA enters the UK mobile and gadget insurance market
    • Post Office and HSBC add an extra element flexibility
    • COVID-19 will increase the importance of value-added benefits…
    • …and will force providers to adapt to the shift to online shopping
  14. Competitive Strategies

    • AXA enters the UK mobile and gadget insurance market
    • By partnering with Pier Insurance…
    • …and Bastion Insurance
    • Post Office and HSBC add extra flexibility and choice to the market
    • Mazuma Mobile and Lycamobile move into mobile and gadget insurance
    • Packaged financial products offer varying levels of protection
  15. COVID-19 and the Gadget Insurance Provider

    • A desire for increased flexibility
    • A focus on added value will be important
    • Providers will have to adapt to the shift to online purchasing
    • Building trust will be a key focus for insurers
  16. The Consumer – What You Need to Know

    • COVID-19 leads to a decline in tech expenditure
    • Non-essential spending resumes as lockdown eases
    • Smartphones remain the key area for growth
    • A quarter would consider gadget insurance in the future
    • People are looking for added convenience from their policy
    • Significant interest in insuring lower-priced gadgets
    • Point-of-sale remains crucial for gadget insurance sales
    • Helping customers realise the value of their gadgets should help to boost interest
  17. COVID-19 and the Consumer

    • A quarter expect to spend less on tech due to COVID-19
    • Younger generations are more positive about their future technology spending
      • Figure 27: Expected spending on technology and communication over the next month, 7 May-24 June 2020
    • Non-essential spending resumes as lockdown eases
      • Figure 28: Proportion of people cutting back on non-essential spending since COVID-19, 16 April-24 June
    • COVID-19 drives increased smartphone ownership among older generations
  18. Gadget Ownership

    • Significant opportunities for growth in smartphone cover
    • Smartwatch and high-end headphone are growth markets
      • Figure 29: Ownership of gadgets, September 2018 vs February 2020
    • Multi-gadget ownership is the norm
      • Figure 30: Ownership of Gadgets, by generation, February 2020
  19. Gadget Insurance Penetration

    • Less than half of smartphone owners have gadget insurance
      • Figure 31: Penetration of gadget insurance, by type of gadget, February 2020
    • Specific gadget insurance is only taken by a minority…
    • …however, is highest among owners of wearable technology
      • Figure 32: Penetration of gadget insurance, by type of coverage and gadget, February 2020
  20. Gadget Insurance and Packaged Current Accounts

    • Gadget insurance drives choice of packaged accounts…
      • Figure 33: Usage of gadget insurance through current accounts/other financial products, February 2020
    • …with multi-gadget holders a key target in this market
      • Figure 34: Usage of gadget insurance through current accounts/other financial products, by repertoire of financial products held, February 2020
  21. Consideration of Gadget Insurance

    • One in four would consider gadget insurance in the future
      • Figure 35: Consideration of gadget insurance, February 2020
    • Positioning gadget cover as an addition to home insurance
      • Figure 36: Interest in specific gadget insurance, by ownership of other types of cover, February 2020
  22. Policy Feature Preferences

    • Convenience is seen as the most important factor
    • Over-55s prioritise multi-policy options and saving on their home insurance
    • Access to early upgrades is a higher priority for Millennials
      • Figure 37: Important gadget insurance policy features, February 2020
    • Multi-gadget policies appeal most to those who would consider cover
      • Figure 38: Important gadget insurance policy features, by ownership and consideration of gadget insurance, February 2020
  23. Value of Gadgets to Consider Insurance

    • People consider a smartphone costing over £400 to be worth insuring
      • Figure 39: Estimated mean value of gadgets worth paying insurance for, by gadget, February 2020
    • Significant interest in insuring gadgets at a lower price point
      • Figure 40: Estimated value of gadgets worth paying insurance for, by gadget, February 2020
  24. Timing of Gadget Insurance Purchase

    • Providers have a limited window to sell cover…
    • …and need to adapt to the shift to online purchasing
      • Figure 41: Time of gadget insurance purchase, February 2020
  25. Attitudes towards Gadget Insurance

    • Half would struggle without access to their smartphone for a day
    • Helping customers realise the value of their gadgets will be vital
      • Figure 42: Attitudes towards gadget insurance, February 2020
    • Issues around trust are still evident
      • Figure 43: Agreement with attitudes towards gadget insurance, by ownership and interest, February 2020
    • Retaining value matters most to younger parents
      • Figure 44: Consumers and Gadget Insurance – CHAID – Tree output, February 2020
  26. Appendix – Data Sources, Abbreviations and Supporting Information

    • Consumer research methodology
    • Abbreviations
    • CHAID ANALYSIS
    • Methodology
      • Figure 45: Consumers and Gadget Insurance – CHAID – Table output, February 2020

About the report

This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

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Data

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*databooks not available with UK B2B Industry reports.

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