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Dunno if you all saw my post earlier or, picked up on the relevant bits of it, like the OFT thing but, here’s some more info and quite probably why the OFT and MMC are after them as I dug a little deeper…
Datamonitor wrote:The market is divided into private motor and household electricals extended warranty
The private motor EW market grew slightly in 2009
The household electricals EW market is considerably larger at £1.2 billion
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
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
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
The electricals EW market is very profitable, with many providers able to make at least a 10{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} margin
Claims patterns in the electricals EW market are largely predictable
UK consumer expenditure on electrical goods fell by 7{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} to £20 billion in 2009
Currently, demand for electricals EW is low and this will remain the case throughout 2010
Some electricals retailers are focusing more on non-electricals sales revenue such as EW to boost profits
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
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
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
The total insured UK EW market is likely to have returned a COR of 90{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d}
EW providers spent £8.5m on advertising, mainly via direct mailThe 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 retailersDSGi had a total market share of 17.4{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} in 2009
Some very, very, very interesting stuff there even although I wasn’t going to spring for the full report as it’s $4500!!
After finding that I also found some stuff that the OFT have published and it turns out that I reckon that the OFT are gunning after the electricals insurance market. End of chat. They want it bust open as they don’t think that there’s any real effective competition in the market which sort of makes sense given that, beyond the 17{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} Currys have there’s only really DAG and BG of any note.
Also very interesting that most of it isn’t actually insurance backed product. Just like a little nit sh1t TA said in it’s report.
Gets better though, none of it is regulated. At all. It’s the Wild West.
The FSA do not regulate any appliance warranty products but they do regulate some insurance brokers, if of course it’s an insurance product which, as it turns out, most of them aren’t.
Like I said, very interesting and sheds a lot of light on why some people don’t want to upset the apple cart.
Meanwhile, the repairers just get the scraps from the table, as usual.
K.
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