The mobile phone has become an almost indispensable device, allowing us to make payments, browse the internet, manage email, take photos and videos, store our boarding pass, and even make phone calls.
The data contained in smartphones (which can cost up to 1500 Euros) is of enormous value to users. The importance of the ubiquitous mobile phone is evidenced by the fact that more and more people are insuring this device, in a similar way to insuring a vehicle or property. The policies on the market cover different aspects: physical damage, electronic damage, theft, data protection or virus protection.
The importance of the sector is considerable, with the size of the European mobile market reaching 6.83 billion in 2024, with growth forecast at 7% per annum.
Telcoinsurance, main markets in Europe
Germany: The central European country has more than 105 million mobile lines. There is a strong insurance culture, with consumers often opting for full coverage plans, including theft, loss and damage.
France: has about 77 million mobile phone connections. It is a market where device insurance is on the rise, especially among young people. Large operators such as Orange and SFR offer different products covering a wide range of potential customers.
Italy: has a very similar number of connections to France. In this market, as in other European countries, the sale of high-end mobile devices continues to rise. A circumstance that favours the emergence of Telcoinsurance services, especially for the first year of purchase of the device.
Spain: has about 61 million mobile lines, which is about 120 lines per 100 inhabitants. Insurance for mobile devices is growing, especially for high-end models.
Telcoinsurance: reasons for its growth
- Digitalization has transformed claims management. Users can now report incidents, submit documentation, and monitor the status of their claims via mobile devices.
- On-demand services are available that allow coverage to be activated only when needed, paying only for the days of use.
- Manufacturers such as Xiaomi, Samsung (Mobile Care+) and Apple (Apple Care+) offer insurance with specific coverage for battery repair and extended warranties.
- Movistar, Vodafone and other operators provide specialised insurance that includes benefits such as SIM card blocking and reimbursement in case of fraudulent use.
- Increase in the number of devices, especially mid-range and high-end devices. The price of mobile phones in Europe continues to grow. Around 32% of the market is dominated by the premium segment with devices starting at EUR 800. Operators are in a privileged position to cover their customers’ protection needs with Telcoinsurance.
- Younger consumers are likely to take out monthly payment insurance.
- It is estimated that around 250,000 mobile phones are stolen in Spain every year. Studies suggest that around 70 million smartphones are stolen worldwide every year.
- Accidental dropping of mobile devices can result in unanticipated expense due to a broken screen or even a major breakdown.
- Spain has one of the highest mobile phone penetration rates (90%) in Europe.
- Loyalty. By offering device protection, mobile operators enhance their brand image and convey the message that they care about their customers’ needs. In the competitive mobile operator market, the ability to retain customers is important.
- Operators have various means, such as SMS, apps, call centres and websites to promote their Telcoinsurance services. They also offer their policies at more attractive prices than traditional insurance companies.
Challenges facing the Telcoinsurance industry
- High fraud rates. A FRISS study in 2022, which surveyed more than 400 insurance professionals, revealed that 20% of claims filed in 2021 were suspected fraud, with false reports of device theft a common scheme.
- Competition between insurers, carriers, and manufacturers is driving down profit margins.
- A significant percentage of customers find the service unattractive, especially for mid-range and low-end devices.
- Managing a network of repair shops efficiently is not an easy task.
- Strong market competition is reducing profit margins by putting pressure on mobile device insurance prices.
