According to a recent report published by Allied Market Research, titled, “Extended Warranty Market by Coverage, Application, Distribution Channel, and End User: Opportunity Analysis and Industry Forecast, 2020-2027,” the global market was valued at $120.79 billion in 2019, and the extended warranty market size is projected to reach $169.82 billion by 2027, growing at a CAGR of 7.4% from 2020 to 2027.
Extended warranty, also known as service agreement or protection plan, provides coverages to increase the length of protection for large purchases. It provides coverages for multiple types of products & brands, ranging from appliances to electronics, wearables, computer equipment, mobile products, and others. In addition, manufacturers tend to deal with limited product & brand set to provide extended warranty as the licensing & credentialing requirements largely differ from other insurance coverages. Furthermore, extended warranty protection plan is a separate agreement purchase by consumers and are designed to provide additional protection for their products. However, consumers face several challenges while dealing with extended warranties. For instance, retailers that do not repair in the store, generally sell extended warranties, which are third-party policies. Therefore, though consumer buy the warranties from retailers, another company handles claim processes.
On the basis of coverage, the standard protection plan segment dominated the extended warranty market in 2019 and is projected to maintain its dominance during the forecast period. Standard protection plan largely covers mechanical & electrical breakdown and several other coverages, which are not covered by manufacturer’s warranty in the market. In addition, this plan is not valid for any products that are either refurbished or purchased by a customer and are largely sold with standard terms & conditions, which is thus, expected to grow at a significant CAGR during the forecast period.
On the basis of application, the automobiles segment dominated the extended warranty market industry in 2019 and is projected to maintain its dominance during the forecast period. Increase in sales of extended warranty at the time of purchase of vehicles is the major growth factor for extended warranties in the automobile sector. In addition, with selling extended warranty plans after initial purchase of a vehicle, third-party providers are playing vital role in the expansion of extended warranty services in the market.
By region, the global extended warranty market was dominated by North America in 2019, and is expected to maintain this trend during the forecast period. To limit their financial risk for car breakdown, consumers taking protection via extended warranties, thereby becoming major driving factors in the region. For instance, in the U.S., nearly 60% of consumers largely prefer extended warranties, while 62% are active users in the country. Further, in Canada, typically new vehicles carry minimum five years of warranty and thus, customers purchase extended warranties from vehicle dealers in the country. Therefore, adoption for extended warranty insurance has widely increased and is expected to maintain its dominance during the forecast period.
The extended warranty industry has experienced decline in revenue, owing to complete business shutdowns across the world. However, due to severe disruption in repair & returns services, key players in the market are extending warranties for their products to ensure effective delivery of on-going warranty services. Furthermore, the extended warranty market is expected to regain its position, owing to factors such as implementation of several strategies and supportive government regulations towards key players in the market.
Key Findings Of The Study
- By coverage, the standard protection plan segment led the extended warranty market size, in terms of revenue in 2019.
- By application, the automobile segment accounted for highest extended warranty market share in 2019.
- By region, North America generated highest revenue in 2019.
The key players profiled in the extended warranty market analysis are ASSURANT, INC., American International Group, Inc., AXA, AmTrust Financial, Asurion. CARCHEX, CarShield, LLC, Endurance Warranty Services, LLC, Edel Assurance, and SquareTrade, Inc. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.