While the continued appetite for individuals to be “always connected” has led to the growing proliferation of wearable devices in recent years, appetite to insure these often expensive gadgets has not followed.
Wearable devices are fast becoming popular among consumers. These electronic devices are normally incorporated into items of clothing and accessories and enable users to communicate hands-free, monitor health and fitness, and often sync with a user’s mobile device, for example a smart watch.
GlobalData’s 2016 UK Insurance Consumer Survey reveals that 16.2% of consumers have at least one wearable device, and this is expected to grow as another 20.1% of respondents would like to have one. As expected, penetration is more prevalent among younger consumers. Popularity reduces with age, resulting in those aged under 40 accounting for 64% of those with this type of gadget.
However, while these may be desired pieces of kit, owners are not that worried about insuring them. According to our survey only 32.2% of those who own a wearable device have actually insured it. This signals a missed opportunity for insurers.
Of those who do insure their gadget, 53.4% do so under their home insurance cover, while 21.6% have cover through their bank as part of their added-value package. Consumers who do not have either of these covers in place opted for convenience by adding the cover when they purchased the device, while a small number purchased insurance independently.
As these gadgets evolve in sophistication they are also likely to increase in value, something we have already seen happen to mobile phones. The latest top-of-the range mobiles are now retailing for approximately £600. This gap in the market provides an opportunity for insurers, but they also need to understand how best to target this market. With new startups entering the market, traditional insurers need to move quickly to maximize this opportunity and convince consumers that cover is needed.