EXTENDED WARRANTY MARKET: OVERVIEW
The Global Extended Warranty Market was valued at USD 126.79 billion in 2021 and is expected to reach USD 256.82 billion by 2030, growing at a CAGR of 7.30% during 2021-2030. The warranty industry is a relatively new addition to the property/casualty market. Insurance coverage has generally become an integral method of transferring this risk in the last thirty years. Warranty coverage is essentially mechanical breakdown insurance; if a product fails to function due to a mechanical or component failure and is covered by a warranty contract, the product is either repaired or replaced, depending on the type of coverage in effect. The pricing of a warranty product lends itself to the expertise of a pricing actuary. Given a credible amount of data, it is generally a line with predictable frequencies and severities. There is usually a large amount of data available to analyze using traditional actuarial methods in the auto warranty class. Other product categories lack large amounts of data, forcing the actuary to develop a price by deriving a value for frequency and severity. Today, the warranty market can be divided into five basic segments, each with its own set of distinguishing features. Automobile service contracts, commercial warranties (for example, policies covering business equipment), home warranties (for example, public service policies covering furnaces and air conditioners), retail warranties (for example, policies covering VCRs), and Original Equipment Manufacturers (OEM) warranties are examples of these segments.
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The COVID-19 has had an impact on nearly every aspect of the economy, the automotive industry remains one of the most affected. The industry is still dealing with the dual impact of declining sales and rising costs, which has caused financial hardship for both OEMs and suppliers. As is so often the case, many automotive OEMs are attempting to compensate for their own declining performance by blaming it on their suppliers. OEMs frequently use a more aggressive approach in pursuing suppliers for historical, or otherwise questionable, warranty claims. It remains to be seen whether OEMs and suppliers' scramble to maintain production in the face of supply chain disruptions, labor shortages, and new safety measures will result in an increase in additional warranty issues in the coming months/years.
EXTENDED WARRANTY MARKET: TREND
Increasing Adoption of Blockchain in Warranty Management Propel Market Growth
In recent years, a powerful technology known as Blockchain has emerged as yet another commanding enabler of digital transformation. The impact of blockchain is now being seen within organizational communities for decentralized information exchanges as well as the public internet, particularly as a cryptocurrency enabler. Today, warranty providers are still dealing with the industry's three critical challenges: protecting against fraudulent claims, detecting counterfeit products, and determining the status of coverage. To make matters worse, businesses are becoming more complex, with more vendors, dispersed manufacturing facilities, new distribution channels, and disruptive business models. It's no surprise that warranty processing and administration costs continue to rise.
EXTENDED WARRANTY MARKET: DRIVERS
Growing Demand for Auto Warranty Drive Market Growth
Automobile warranties are highly sought after by buyers of both new and used vehicles. Because no car owner wants to be held responsible for high maintenance costs when something unexpectedly goes wrong with their vehicle, manufacturers incorporate warranties into their pricing as a means of compromising with the consumer. Unfortunately, automobile warranties do not last forever. In fact, most manufacturer warranties only last three to four years (or 36,000 to 50,000 miles, whichever comes first), after which the consumer is left to fend for himself or herself, just as their vehicle begins to show signs of ageing. As a result, consumers have devised strategies to purchase extended warranties, which extend a car's coverage beyond the original factory warranty for a set period of time or mileage, whichever comes first.
The extended warranty, also known as the protection plan, extends the warranty period on products by several years. While new consumer electronics come with a manufacturer's warranty, many customers opt for an extended warranty to cover repair costs after their initial warranty has expired. For a consumer product, a manufacturer's warranty is typically valid for one year. Consumers can purchase an extended warranty at any time, even after their original manufacturer's warranty has expired. It generally protects against normal wear and tear as well as product defects. Many of the plans also cover accidental damage, such as the user spilling something on the device or dropping it. The retailer, manufacturer, or warranty administrator may offer an extended warranty, which is charged as a percentage of the product's retail price. Extended auto warranties are becoming increasingly popular. An extended car warranty can be purchased separately and covers covered repairs or replacement costs in the event of a breakdown or mechanical issue. There are two kinds of extended auto warranties. The first is from OEM, which is offered by the vehicle manufacturer; these service plans include additional coverages for a fee in addition to the factory warranty.
Global Extended Warranty Market Report Coverage
|Market Size in 2021:||USD 126.79 Billion|
|Forecast Period 2021-2030 CAGR:||7.30%|
|2030 Value Projection:||USD 256.82 Billion|
|Historical Data for:||2017-2020|
|No. of Pages:||210|
|Tables, Charts & Figures:||120|
|Segments covered:||COVID-19 Impact Analysis Report, By Type, By Application, By End-User, By Region|
|Companies Covered:||Corporate Warranties India Pvt. Ltd, Chubb Limited, Advanced American Auto Warranty Services LLC, Allianz Global Assistance, Amtrust Financial Services, Inc., Assurant, Inc. (The Warranty Group, Inc.), SquareTrade, Inc., American International Group, Inc., Asurion LLC|
|Growth Drivers:||1)The Global Extended Warranty Market is segmented by Type, Application, End User, and Region.|
|Pitfalls & Challenges:||COVID-19 has the potential to impact the global market|
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Increasing Demand for Brown and White Goods Boost Market Growth
White is generally home and kitchen appliances used for various common tasks and purposes such as washing of clothes, heating & cooling, cleaning, in hospitality sectors, cooking and preservation of food and many more applications used widely in day-to-day life. Brown goods are indicators of the changing consumer scenario in post-liberalization economic environment. The major products constituting the brown goods market are Computers, mobiles, television and laptops. The demand for White and Brown Goods has been spurred by rising disposable income, urbanization, and growing demand for human comfort, as demand for White Goods such as air conditioning, coolers, and fans is fast expanding due to changing environmental conditions. Consumers are mostly drawn to acquire and replace their old household appliances because of technological advancements in White and Brown Goods. Many White and Brown Goods manufacturers are improving their products to differentiate themselves from their competition.
The white and brown goods have a wide range of products which fuels the extended warranty market. The demand for brown and white goods has reached out to semi-urban and rural markets as well. This is because of the shift in living style of the population, increasing electrification of villages and relatively higher purchasing power of consumers. As the market penetrates into the core middle-class segment in both urban and rural areas, it is expected to expand phenomenally, offering large volumes to the industry.
EXTENDED WARRANTY MARKET: RESTRAINT
High Extended Warranty Cost May Restrain Market Growth
An extended auto warranty, or a vehicle service contract, is an optional cover for the major auto repairs and parts replacements for your vehicle. This cover can be purchased at any time, and it usually begins after the manufacturer’s warranty expires, although they may overlap. An extended warranty is different from standard warranty in that it covers more parts for a longer period. While factory warranty may last up to three years extended warranties can increase coverage for seven years or longer, depending on the provider. These all costs more than the average standard warranty. Extended warranties usually come in two main parts: inclusionary and exclusionary. An inclusionary protection plan only covers the repair costs for the parts listed in the contract. In contrast, an exclusionary contract will only list the parts that are not covered, so repairs for anything outside those parts are eligible for a claim. An exclusionary contract will be more expensive since it’s a more comprehensive plan.
EXTENDED WARRANTY MARKET: SEGMENTATION
The Global Extended Warranty Market is segmented by Type, Application, End User, and Region. Based on the Type, the market is categorized into Accidental Protection Plan, and Protection Plan. Based on Application, the market is categorized into Consumer Electronics, Automobiles, Home Appliances, and Others. Based on End User, the market is categorized into Individual, and Business. Based on the Region, the market is categorized into North America, Europe, Asia-Pacific, Latin America, Middle East and Africa.
EXTENDED WARRANTY MARKET: BY REGION
Based on the Region, the Global Extended Warranty Market is categorized into North America, Europe, Asia-Pacific, Latin America, Middle East and Africa.
North America will have the highest growth due to consumers seeking protection from car breakdowns through extended warranties, which boosts market growth in the region. Furthermore, in Canada, new vehicles typically come with a five-year warranty from the dealer, which encourages customers to purchase extended warranties from the same vehicle dealers across the country. The North America region is dominating the market share of the global extended warranty market owing to the major players are operating in this region.
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EXTENDED WARRANTY MARKET: COMPETITIVE LANDSCAPE
The major key players operating in the global extended warranty market are American International Group, Inc., ASSURANT, AmTrust Financial, INC., AXA, Endurance Warranty Services, LLC, Asurion. CARCHEX, CarShield, LLC, Edel Assurance, and SquareTrade, Inc.
Many companies are doing merger and acquisition activities such as AmTrust and Servify Announce Device Protection Partnership, the companies have joined forces to offer a program that can scale to millions of users and devices. Porter Airlines has also partnered with Allianz Global Assistance as its new travel insurance provider, providing customers with a variety of insurance products and options. AIG also announced a strategic partnership with Blackstone for its Life & Retirement business, as well as the sale of certain affordable housing assets to Blackstone.
EXTENDED WARRANTY MARKET: KEY PLAYERS
• Corporate Warranties India Pvt. Ltd
• Chubb Limited
• Advanced American Auto Warranty Services LLC
• Allianz Global Assistance
• Amtrust Financial Services, Inc.
• Assurant, Inc. (The Warranty Group, Inc.)
• SquareTrade, Inc.
• American International Group, Inc.
• Asurion LLC
The scope of the report includes a detailed study of regional markets for Global Extended Warranty Market. The report covers the Global Extended Warranty Market segmented by Type, Application, End Users, and Region. It reveals the market situation and future forecast. The study also covers the significant data presented with the help of graphs and tables. The report covers information regarding the competitive outlook including the market share and company profiles of the key participants operating in the Global Extended Warranty Market.
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