Capitalization of the global market for mobile phone insurance reached 24.9 bln USD as the result of 2019. Before the pandemic our major scenario expected this market to demonstrate CAGR of approximately 12,5% year on year.
Now, as people disposable income dicreased substantially all around the globe, we review our growth expectations for this segment. Midterm factors to influence this market substantially are:
Decrease of the real disposable income. As the result in the best case scenario the global market for mobile phones sales to shrink for approximately 6-7% as the result of 2020. The pessimistic scenario could be even more negative, as according to the last Gartners analysis, the global market for mobile sales to decrease for approximately 13,6% as the result of the Covid19 pandemic at 2020;
Global trade limitations. We expect serios relocations at the existing supply chains after the pandemic, which could seriously affect the global trade, increase operating expenses for both: suppliers and manufecturers and increase prices for consumers, what in the paradigm of decreasing incomes could limit demand even more seriously;
Reversal at the customers behavior. All the above mentioned could also lead to the substantial reversal at the customers behavior. The average repacement ratio (coefficient, used to evaluate average number of years of use before the smartphone be replaced with the new one) will decrease from approximate 2.5 years in 2018 up to 2.7 years at 2020 and to 3.0 years at 2021.
All the above-mentioned factors could lead to the CAGR shrinkage of interlinked markets (for example, mobile phone insurance market). In case this worst-case scenario will be realised, we expect the CAGR of the global mobile phones insurance market to decrease to approximately 8,6% year on year at the midterm (in the period after 2020 year).
To make situation and our forecast straight, even in our worst-case scenario, we do not expect the mobile phones insurance market to decrease, negative effect could be in narrowing of the growth pace of this market in the mid-term, as in the long term (after 2023-2025) we predict this market to get back to its before-Covid growth rates (at abot 12-13% year on year). This tendency could be explained due to several factors:
The increasing number of smartphones users and divergence in the way smartphones are used by the major audience. In the modern world smartphones are much more than just instruments for connecting people. There’s only few of the major statistics, which could prove our view on this market:
About 81% of the adult americans and 79% of adult UK citizens are owners of at least one smartphone;
In 2019, 56% of all website traffic worldwide was generated through mobile phones, while about 66% of smartphone users are addicted to their phones;
In 2018, there were 7.9 billion mobile broadband subscriptions worldwidem while from 2013 to 2018, global smartphone sales were valued at 522 bln USD;
The market for mobile gaming is the largest segment in global gaming industry, which will reach approximately 100 bln USD by 2021.
Rising number of incidences of accidental damage, phone thefts, device malfunction, etc., are also among the key factors driving the global mobile phone insurance market;
Other factors driving the market include rising demand of data and virus protection plans, improving access through improved distribution networks, rising demand of premium smart phones, etc. Looking forward, IMARC Group expects the global mobile phone insurance market to exhibit strong growth during 2020-2025.
In the next article of this series we will discuss in more detailes the above mentioned pessimistic scenario and how several major segments of the mobile insurance market will react to it in case of its realisation.