The industry will grow as consumers return to work and make big-ticket purchases again
Los Angeles, CA (PRWEB) March 14, 2013
The Product Warranty and Liability Insurance industry engages in underwriting activities for consumer purchases of major electronics, household appliances and other products. Warranty policies protect consumers from defects or damage while covering repair and replacement costs. Thus, revenue performance correlates highly with the level of demand for these products. As a result, product warranty insurance providers felt the brunt of the recession's effects as consumers struggled with lower disposable income, rising unemployment and limited access to financing. “These hardships funneled through to demand for household appliances and general consumer electronics as consumers held back purchases during the downturn,” says IBISWorld industry analyst Antonio Danova. “The reduction in purchases created fewer opportunities for underwriting new product warranty policies, ultimately forcing revenue down 12.7% during 2009.” Nonetheless, the improved economy has helped boost revenue back up, including a small 0.3% increase during 2013. The economic upswing, however, was not enough to push the industry back toward growth over the five years to 2013. As a result, IBISWorld expects industry revenue to fall an annualized 1.2% to roughly $5.9 billion over this period.
Despite some losses as a result of the recession during the early part of the five-year period, the Product Warranty and Liability Insurance industry has been buoyed by growth in a specific market. Third-party insurance providers have been experiencing increased demand from consumers because of their low-cost model, online convenience, highly-rated customer service and rapid claims response teams. While these firms have bolstered revenue, they have also forced some of the more traditional insurance providers out of the industry after they could not recover from the recession. As a result, IBISWorld expects the total number of industry firms to fall 1.4% per year on average to about 56. The industry has a low level of concentration; The Warranty Group is the only major player holding a significant market share. “The industry comprises companies that underwrite warranty protection, rather than the manufacturers who offer limited warranties against factory defects,” adds Danova. “As such, the industry is fairly fragmented, with few companies able to count more than a few retailers as customers.”
Over the next five years, the Product Warranty and Liability Insurance industry is forecast to return on a path toward growth. This growth will be backed primarily by the improvement in the overall economy and its effect on consumer income levels. As more Americans return to work, the level of consumer disposable income is expected to rise, increasing consumers' ability to make big-ticket purchases that they may have delayed in recent years. This trend will benefit product warranty insurance providers, helping to increase revenue over the five years to 2018. For more information, visit IBISWorld’s Product Warranty and Liability 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
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.