Extended Warranties Are a Big Business

By Bob Raikes
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Warranty Week has been looking at extended warranties and estimates that the value of extended warranties on appliances, electronics, computers, and mobile phones is around $23 billion in the US. The blog said that AIG, the insurer covers the accidental damage protection portion of the AppleCare extended warranty programme and sells an $7.25 billion worth of contracts in the year ended September 2015, and an estimated $5.9 billion in the year ended September 2016. Because of that deal, the company is estimated to have around 21% of the service contracts sold in the U.S. for mobile phones, appliances, and electronics, second to Asurion which dominates the mobile phone insurance sector and still has the Walmart account.

Asurion Service Plans Inc. is the administrator of protection plans sold by three out of the four major American cellphone networks: Verizon, AT&T Wireless, and Sprint and also covers Amazon.com, BJ’s Wholesale Club, Home Depot, Walmart, and others. Warranty Week estimates that Asurion has its name on half the retail service contracts sold to U.S. consumers for mobile, electronics, and appliances.

The $4.7 billion that Apple paid in product warranty claims last year qualifies it as one of the world’s largest warranty providers, the blog said.

AppleCare Service Company Inc runs the Apple extended warranty programme while AIG provides the underwriting for the accidental damage. Warranty Week estimates that AppleCare was a $1.3 billion protection programme in 2007 but by 2011 it accounted for nearly $3.4 billion in sales. That rose to $ 6 billion in 2014 and in the year to September 2015 it reached $7.25 billion, making it the largest programme, globally.