December 9, 2022
The Cost of Living Impact on Mobile Device and Gadget Insurance Policy Cancellations
Author: Glen Adam
A recent article in the Insurance Times referenced research conducted by financial comparison website NerdWallet of 2,000 Brits, on how they were coping with financial pressure. In the article, the research revealed that 29% of respondents said they had stopped paying for insurance cover in the past 12 months and when it came to mobile and gadget insurance, 35% said they were “Most likely to cut back on this cover”.
At EIP, we manage hundreds of thousands of UK mobile and gadget insurance policies, across a number of UK schemes, so we wanted to see if the research stacked up with the facts.
Our data shows that the average number of UK policy cancellations between the five months of May 2021 and September 2021 versus the same period for 2022 (i.e. May 2022 to September 2022) has increased by 33%.
The data therefore, does seem to support the research that around a third more customers are cancelling the device insurance this year, compared to last.
Clearly however, the UK has been through a few turbulent years, making year on year, like for like, comparisons difficult. During Spring 2021 the UK was still firmly under lockdown rules meaning few people we’re going into retail stores to upgrade their devices and therefore taking decisions on their mobile plan and ‘add-ons’ such as insurance. Similarly, its only since Spring 2022 that consumer behaviour has slowly started to re-adjust back to pre-pandemic levels.
As such, some of the increase in policy cancellations may well be down to a return to pre-pandemic norms. Particularly when you consider that the number of UK customers taking device insurance is still seeing an overall net growth.
That said, it’s clear that significant increases in the cost of living over the past quarter are influencing consumer behaviour and the decision to add insurance when upgrading their mobile device.
This does open up an interesting debate as to whether, during times of increasing financial pressure, insuring mobile phones and other gadgets should be an even more important consideration for customers?
Consumers are undoubtedly keeping their mobile phones for longer because the devices are becoming more expensive and they can’t afford to upgrade each year. The financing and trade-in schemes being adopted by many mobile networks reflect this growing trend. Therefore, consider a customer on a device financing plan who doesn’t want to be paying for a device which they’ve broken, or even worse, had stolen, then having insurance is a great way to protect themselves.
Similarly, if the last few years of lockdown have taught us anything, it’s the importance of being able to stay in touch and how vital our mobile devices are to our everyday lives. So actually, having device insurance is a great way for a customer to both ensure they’re not met with an unexpected cost during times of financial uncertainty, but also that they’re never without their device for longer than they need to be.
These are tough messages to land however, when many consumers are thinking about the ‘now’ and having to make trade-offs on what they spend their dwindling cash on.
We’ll be watching closely what happens to the device and gadget insurance market over the next six months. If inflation continues to grow, then clearly more and more consumers will be forced into making trade-offs. Watch this space for updates!
Contact EIP today to find out more
EIP Limited is the market-leading provider of white-labelled Insurtech software and a plug and play digital market place to enable leading corporates to offer insurance and subscription products to their end customers. The company enables subscription-based insurance providers to reduce costs, maximise profits and upgrade their digital customer experience. Our clients include some of the largest mobile communications, banks and Insurance companies in the world.