The recovering housing market and rising disposable income are anticipated to help bolster downstream sales of appliances and electronics in 2015.
New York, NY (PRWEB) March 26, 2015
Over the past five years, a number of trends have diminished revenue for the Product Warranty Insurance industry. Declining prices for electronics, the largest product group for which industry operators underwrite warranties, have decreased the prices of premiums to insure these goods. Moreover, electronics and appliances are increasingly produced and sold abroad, and many of the largest manufacturers, such as Samsung and LG, are foreign-owned. Globalization in the industry's main markets has contributed to fewer warranties being underwritten domestically.
Operators in the industry underwrite factory warranties for manufacturers and extended warranties for retailers and consumers. Product warranties insure major electronics, household appliances and other products against defects or damage and cover repair and replacement costs. Additionally, the industry earns revenue from investment income, which has declined in the five years to 2015. According to IBISWorld Industry Analyst Leah Goddard, “Since the recession, the US Federal Reserve has kept interest rates low to spur consumer spending and business investment. As a result, operators' returns on fixed-income securities have decreased, reducing investment income.” For these reasons, industry revenue is forecast to decrease over the period at an annualized rate of 3.7% to $1.3 billion. “The recovering housing market and rising disposable income are anticipated to help bolster downstream sales of appliances and electronics in 2015, slowing the industry’s decline over the year,” says Goddard.
Despite these negative trends, third-party providers that underwrite warranties directly for consumers are growing strongly due to their low-cost model, online convenience, highly rated customer service and rapid claims response teams. Innovative solutions from third-party providers will help return the Product Warranty Insurance industry to growth over the next five years. This growth will be supported by improvements in the housing market and household wealth. As the unemployment rate continues to decline, disposable incomes will rise, increasing consumers' ability to make big-ticket purchases they may have delayed in recent years, such as home appliances and electronics. This trend will benefit product warranty insurance providers, helping to increase revenue over the five years to 2020.
For more information, visit IBISWorld’s Product Warranty Insurance in the US industry report page.
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IBISWorld industry Report Key Topics
This industry comprises establishments primarily engaged in underwriting product warranty policies, which protect the buyer of the product from defects and damage. The industry excludes warranty programs for homes, automobiles and other vehicles. It also excludes companies that perform repair services for products under warranty.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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