General Insurance intern Harsh Bakshi has been working on our “UK Smartphone Insurance 2017” report. Here, we ask him about the key findings of his research, new and emerging trends, and how he expects the market to develop over the coming years.
How much are people insuring their smartphones in the UK?
Smartphone insurance itself is surprisingly unpopular: while 81% of adults in the UK have smartphones, only 31% have smartphone insurance. There seems to have been a delayed reaction to the explosion in the cost and prevalence of smartphones, as well as to our newfound reliance on them. Not only do we spend hours a day and hundreds of pounds on them, not to mention often storing our most valuable information on them (e.g. passwords, bank details), but we lose and break them all the time too – there were over a quarter of a million smartphone thefts in the UK last year. Perhaps equally surprisingly – and archaically – the majority of people who do currently have smartphone insurance are covered only against physical theft, loss, and damage.
How is smartphone insurance developing as a product?
Insurtech innovation is leading development here, with, appropriately, a number of mobile-first and app-driven propositions emerging. Further, “social insurance,” or peer-to-peer insurance, is a model being seen in this space; attempting to reinvent smartphone insurance not just as a valuable product in itself but a social one too. Under these policies, friends can take out insurance together and earn a percentage of their premium back if none of them make any claims. We are also seeing dynamic pricing models in the smartphone insurance market, allowing customers to turn insurance on and off and vary their coverage using an app on their smartphones.
Some insurers are also adapting to cover the wider range of uses and risks of smartphones, with e-wallet and data protection now offered by some firms. Loveit Coverit, a popular gadget insurer, offers to track fraudulent activity and identity theft online. As we become increasingly alert to these more insidious risks of smartphones – mobile banking and e-commerce especially – we should see greater take up of these kinds of policies. All of these innovations are being driven by insurtech firms.
What can we expect from smartphone insurance going forward?
The basic facts about smartphones in the UK – their penetration levels, their average price and their functionality – look unlikely to change significantly in the next five years. One thing we can expect to change is the level of take up for smartphone insurance. Smartphone become more integral to UK consumers’ lives each year, so I think we can expect to see smartphone insurance penetration to rise accordingly, if with a slight delay. Our data indicates that this is already happening.
The range and sophistication of policies offered looks like it will grow too as cover beyond just the classical loss, theft and physical damage comes to be required. Many banks and home insurers currently insure a smartphone just as they would insure a necklace, with little heed to the greater range of risks that smartphones are susceptible to and the range of services they can offer as protection. These old players will need to update their policies or risk losing out to emerging insurtech firms that are catering more suitably to the market.
By Harsh Bakshi, General Insurance Intern