Mobile Devices Spur Strong Growth For Extended-Coverage Providers



Third-party administrators and their insurance underwriters appear to have bucked the no- to slowgrowth trend in CE.

Aided by solid account management and unbridled demand for mobile devices including tablets, smartphones and e-readers, the extended-warranty and service-plan industry’s leading players largely reported robust sales in 2011 and are forecasting another strong year in 2012.

James Mostofi, president of Chartis’ U.S. warranty division, said his company’s CE service-contract programs were “exceptionally strong in 2011, predominantly driven by strong sales in notebooks, e-readers and smartphones” and gains in its major appliance business. Chartis is expecting more of the same in 2012, he noted.

Indeed, Chartis and its newly acquired subsidiary Service Net have experienced a tremendous mix shift to mobile over the last 24 months. “Sales of service contracts in mobile devices now represent more than a larger portion of all active contracts that we administer,” said Service Net president Chris Smith, with additional coverage such as theft loss also contributing to rapid growth in the mobile sector.

Keith Meier, senior VP/general manager for extended service at Assurant Solutions, reported that “last year was tremendous for us. We experienced strong double-digit growth from both new and existing clients, and we feel really good about 2012” after launching a large new client in December and nearing the launch of another early this year.

“Our industry is growing and changing, and we are poised to lead the way in meeting those changing consumer expectations,” Meier reflected. “We will continue to be innovative in 2012 and develop new products and services that meet consumer demand. We leverage our consumer insights to help our business and that of our clients.”

Those innovations include last year’s introduction of a next-generation e-portal solution that allows customers to manage their plans and claims online, and this year’s release of a MyClaim app that provides consumers with a new channel to manage their service plans, check the status of their claims and reschedule service appointments. “Both of these innovative mobile and web-based tools meet a growing customer demand for accessibility and convenience and enhance the customer experience,” Meier said.

Mike Frosch, president/COO of The Warranty Group’s North America consumer products unit, said double-digit growth across virtually every category helped the singlesource provider for OEMs and retailers hit $1.8 billion in global revenue last year. “We saw good growth with existing clients and new growth through the acquisition of new clients,” including Barnes & Noble for its Nook e-reader. Also driving growth was strong unit gains and expanded market share in OEM TV warranties; robust demand for tablet, PC, smartphone and appliance protection; and higher attach rates for accidental damage coverage on portable devices.

Warrantech, a unit of AmTrust Financial Services, similarly enjoyed double-digit growth in the majority of its business sectors last year and expects more of the same in 2012. Newly named CEO Sean Stapleton attributed the growth “to our continued focus on servicing our existing account base with strong account management, sales training and incentivized sales programs.”

Stapleton noted that the company will continue to focus heavily on the mobility market by providing an innovative suite of product protection offerings on mobile devices. “There’s no mistaking our nation’s collective dependence on these types of mobile devices,” he said. “For many of us, smartphones, tablets and ereaders have all but replaced office phones, PCs and books. Without these devices at their fingertips, many people feel a bit lost.

“Consequently,” he continued, “our product protection offerings for mobile devices are designed to provide rapid repair or replacement service to get the devices back into the hands of their owners, and we will be offering plans with additional data protection benefits to protect critical customer data. This segment is and will continue to be a major focus for us and the clients we serve this year and beyond.”

Charles Pipia, president of Global Warranty Group (GWG), described calendar year 2011 as “exceptional” for the company in terms of revenue growth and expansion of its North American customer base. GWG signed a significant number of retailers in the CE, major appliance and wireless markets, he said, and “successfully introduced and launched many new exciting products and services.”

GWG has been a major beneficiary of the boom in mobile products, as wireless and portable CE devices have long been one of the company’s core business competencies, Pipia said. He described GWG as a leading provider of warranty programs for cellphones, smartphones and tablets, providing programs to more than 8,000 retail locations throughout the U.S. and Canada.

“The explosive sales growth of these devices has contributed greatly to the growth of GWG,” he noted.

Looking ahead to the balance of the year, Pipia anticipates robust growth fueled by “exceptional customer service and the unparalleled attention to detail we provide our retailers.”

Jennifer Monasterio, president of Mack Worldwide Warranty, said the company is “pleased that our business showed steady growth in 2011. Mack strived to diversify its product line in order to reach different sectors of the consumer electronics industry,” she reported, and “offering coverage for a wider variety of products allowed Mack to capture a greater market share at times when consumer spending was low.”

She added that the company is “very optimistic that we will see modest growth in 2012 while we develop more innovative products and services.”

In particular, “the increasing popularity of tablets and smartphones has allowed for even more opportunities to grow our business,” Monasterio continued. “Mack has implemented accidental damage plans that provide coverage for all types of wireless devices,” and has acquired new clients that specialize in the selling and repair of mobile products.


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