The Indian smartphone insurance segment could become a $500 million market by 2025 as it is expected to grow at a compound annual growth rate of 29 percent, according to a research report published by RedSeer.
Smartphones are being actively used by 500 million users in the country and this number could jump to almost a billion in the next five years, adding 78 million users per year.
In the report, titled ‘The $500 Million potential Indian Smartphone Insurance market – But are the customers’ interests truly protected?’, RedSeer has pointed out that multiple unlicensed players have entered this space. They are working with retailers and distributors to sell insurance on top of new smartphone purchases but are not able to handle claim settlements properly. Moneycontrol has seen a copy of the report.
The report said that while smartphone penetration awareness in India is around 3.5 percent, the maturity of the regulatory ecosystem is very low. The report has cited the case of AppsDaily, which it said has shut down because of the lack of regulatory controls. The moment the platform could not manage the assets, the tie-up with New India Assurance broke off and the company could not manage its liabilities, RedSeer pointed out.
The report has highlighted that if there is stricter regulatory control on who exactly can sell these products, there will be an improved experience for consumers and the market will grow better.
The report compares two insurance products, for two-wheelers and smartphones. While two-wheelers need to be covered with insurance, in the case of smartphones, market penetration is only 11 percent. The total units sold for smartphones is around 150 million while that of two wheelers is only around 20 million. But in terms of cost, smartphones are insured with almost 10 percent of the cost of the product while for two wheelers it is only 2 percent.
Third-party insurance providers also do not mention the name of the insurers, unlike in the case of insurance companies such as Digit and Acko, which RedSeer feels is a major problem. Stricter regulations will help protect consumers, it said.
Overall, RedSeer feels that licensed insurance companies have the highest trust from consumers, unlike third-party service providers. A survey of 1,877 Amazon user reviews showed that more than 60 percent trust licensed players.
“Smartphone insurance is truly evolving as a great opportunity for the Indian general insurance industry, with India on the path to become the largest smartphone market in the world…regulatory intervention and clarity is really important to ensure success of this industry, as it would bring in consistencies in customer experience, and drive increased satisfaction,” said Abhishek Chauhan, Head – India Consulting, at RedSeer Consulting.
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