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Aug 17, 2010

UK Extended Warranty Insurance 2010 now available at ReportsandReports

Dallas, TX: ReportsandReports announce Japanese UK Extended Warranty Insurance 2010 Market Research Report in its Store.

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UK Extended Warranty Insurance 2010 provides a detailed overview of the extended warranty market. The report is divided into two core segments: private motor and household electricals extended warranty. Both sections examine the total market size, retail sales, profitability, claims, distribution, key competitors and forecasts.


  • Information and data on the attractiveness of the motor and electricals extended warranty market.
  • Detailed car parc and electrical retail data.
  • An overview of the market structure and competitors that are active in this space.
  • An insight into how industry players view this market taken from in-depth interviews.


The total private motor extended market grew marginally by 1.6% during 2009. Datamonitor has noticed that some dealers which sell motor EW have been more vigorous in the up-selling of this product, as they have experienced a significant fall in car sales and so need to seek other non-sales related revenue.

The white goods electricals extended warranty market is the largest because penetration rates are highest in this sector, with many providers estimating penetration at around 25%.

Most extended warranty policies are sold at point of sale, although post point of sale sellers are growing in size because customers are researching online for the cheapest coverage.

Reasons to Purchase

  • Understand the extended warranty market and which companies sell this product.
  • Get to grips with the size of the market and how it is anticipated to grow in the future.
  • Make decisions based on detailed statistics taken from a wide array of sources including Datamonitor’s sister company Verdict Research.

Table of Contents




Executive Summary

The market is divided into private motor and household electricals extended warranty

The private motor EW market grew slightly in 2009

Motor EW sales have held up well against the weak used car market

The household electricals EW market is considerably larger at £1.2 billion

UK consumer expenditure on electrical goods fell by 7% to £20 billion in 2009

Most extended warranty policies are sold at point-of-sale

New and used car dealers account for the vast majority of motor EW policies sold

Electricals EW is distributed mainly at POS by retailers

However, the post-POS market is growing in importance

The future of EW sales depend heavily on the state of the car and electricals markets

A resurgence in used car sales will drive growth in the private motor extended warranty market

The take-up of electricals EW will be low as the electrical retail market will remain weak

Market Context


EW insurance provides protection beyond the manufacturer’s base coverage

EW insurance offers buyers peace-of-mind

Motor warranty policies will pay for the costs associated with replacement parts and labor charges

There are a number of similar motor EW products available on the market

The private motor EW market was resilient in 2009

The total private motor EW market grew by 1.6% in 2009 to reach £534m

In some cases the EW is simply included within the price of the car

The market is characterized by insurers, administrators and some customer-facing providers

Not all of the motor warranty products sold to customers are insurance-backed

Captives represent an efficient way for manufacturers and dealers to control insurance-backed schemes

Despite the collapse of the car market, used car motor EW sales have not declined

Gross advances for motor finance fell by almost 10% in 2009

As a result of the fall in car sales, the total car parc for 2009 saw minimal growth compared with 2008

Interestingly, the fall in new car sales has helped increase the number of potential EW customers

The majority of cars on the road are aged between seven and 10 years

Market sentiment is that just over a quarter of all used car sales have an EW policy sold alongside it

Improving EW awareness will help providers tap into dormant car owners

Customer-facing providers Warranty Direct and Warranty Wise spent a total of £226,233 on advertising in 2009

Providers make a good margin on private motor EW products

Over the past few years, claims have been static

While suspension parts are the most frequent car fault, electrical related faults dominate EW claims

Proposals by the Department for Transport to introduce more 20mph zones without traffic calming measures may reduce claims

The recession has prompted many to undertake their own vehicle service, which invalidates EW claims

Household appliance EW is sold for a variety of different electricals

The electricals EW market is characterized mainly by service contracts

The total electricals EW market is expected to have been worth £1.2 billion in 2009

White goods EWs account for the vast share of the total electricals EW market

The majority of electricals EWs are service plans, rather than insurance-backed

Just over 70% of all electricals EW policies were service plan-backed in 2009

Service-backed schemes are cheaper and more tax efficient for retailers providing electricals EW policies

The electricals EW market is very profitable, with many providers able to make at least a 10% margin

Price competition in the electricals EW market is not as strong as in the electricals retail market

Claims patterns in the electricals EW market are largely predictable

UK consumer expenditure on electrical goods fell by 7% to £20 billion in 2009

The UK electricals retail market is dominated mainly by brown goods

Audiovisual, IT processing and major household appliances are the largest sub-sectors

The electricals market is plagued by considerable price deflation

Currently, demand for electricals EW is low and this will remain the case throughout 2010

The stagnant housing market has shrunk demand for white goods

The growth in the number of households should continue to benefit the UK electricals market

Some electricals retailers are focusing more on non-electricals sales revenue such as EW to boost profits



Car dealers are the main sellers of motor EW policies

New and used car dealers account for the vast majority of motor EW policies sold

Distribution of motor EW is expected to see no real changes over the upcoming years

Warranty Wise provides motor warranty protection

A greater emphasis on educating and training dealers will improve POS distribution of EW policies

Electricals EW is distributed mainly at POS by retailers

However, the post-POS market is growing in importance

Since 2005, the BIS has stipulated that sellers of electricals EW must follow a set of guidelines

Electricals specialists dominate the total electricals retailing market

The growth of online retail distribution has reduced retailers’ POS advantage

Most UK individuals spend between £21 and £50 on electrical goods

Insurers should be working more with credit card providers to sell EW insurance

Competitive Dynamics


Domestic & General is the largest electrical EW underwriter via its non-POS strategy

Allianz Schemes has partnerships with Argos, Amazon and GAME

London General Insurance holds the John Lewis contract

Car Care Plan is the largest provider of motor EW

Cardif Pinnacle distributes car warranties through Warranty Direct

Warranty Direct is a customer-facing online provider active in the EW market

Mondial Assistance also offers motor manufacturer’s warranty services

Insurers are underwriting less EW

The insurance-backed market is shrinking

The insured market is becoming more concentrated

Domestic & General, QBE Europe and London General Insurance all gained market share in 2008

The total insured UK EW market is likely to have returned a COR of 90%

EW providers spent £8.5m on advertising, mainly via direct mail

Both Domestic & General and DSGi focus their advertising on the direct mail channel

The remainder of the market is made up of service providers and administrators

The Warranty Group provides motor and electricals warranty products

British Gas plans to underwrite all of its household and warranty products

DSGi, Argos and Comet are the largest UK electricals retailers

DSGi had a total market share of 17.4% in 2009

Argos is the only remaining catalogue retailer in the market, with a share of 11.2% in 2009

Comet’s new product range helped increase its market share by 0.5 percentage points to 8.2%

Future Decoded


The motor EW market will grow gradually

Initial penetration increases followed by a resurgence in used car sales will drive growth

New car registrations are expected to grow by a yearly average of 6.1% over 2010-14

As a percentage of the total car parc, cars aged between four and 10 years will decrease

The electricals EW market will shrink slightly in the short term

The up-take of electricals EW will rely heavily on the state of the electricals retail market

Total consumer expenditure on electrical goods will be lower in 2010 and 2011



Captive insurance

Car parc

Extended warranty (EW)

Franchised dealer

Gross premium

Independent dealer

New car registrations

Written premium

Brown, white and grey electricals categories


Datamonitor’s European Automotive Markets 2010 Database

Financial Services Consumer Insight Survey 2009

Further reading

Ask the analyst

Datamonitor consulting

Verdict research


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