EXTENDED WARRANTIES AND INSURANCE FOR MOBILE AND NON-MOBILE CONSUMER PRODUCTS IN THE CZECH REPUBLIC TABLE OF CONTENTS 0.0 EXECUTIVE SUMMARY...

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1 TABLE OF CONTENTS 0.0 EXECUTIVE SUMMARY INTRODUCTION... 3 What is this report about?... 3 Rationale... 3 Evolving distribution channels both favour and compromise extended warranty provision... 3 Methodology... 4 Manufacturer and retailer survey... 4 The survey's scope covers 66 manufacturers and retailers of mobile and non-mobile consumer products... 4 Market data... 4 Distribution channels for retailers... 5 Definitions... 6 Extended warranties and insurance... 6 Extended warranties and insurance linked to consumer products come in a variety of formats... 6 and are frequently marketed to consumers under alternative titles... 6 Premiums and other revenues... 6 Operating models... 7 Weighted shares... 7 PartnerBASE and market data annexe... 7 Finaccord WHITE GOODS... 9 Introduction... 9 Underlying market value and volume The value of the Czech white goods market increased by more than CZK 1 billion from 2009 to Manufacturers' original warranty length and consumer law Two-year factory warranties are universally offered by manufacturers of white goods Manufacturer schemes for extended warranties and insurance Most manufacturer programs are run internally although one external insurer claims a partnership Retailer schemes for extended warranties and insurance Nine major retail brands operate an extended warranty scheme for white goods Allianz claims the most partnerships but BNP Paribas Cardif the highest weighted share Risk coverage of all schemes for extended warranties and insurance The cover in most programs is limited to extended warranty only, not accidental damage Independent distribution channels Market value for extended warranties and insurance Market forecasts to Between 2013 and 2017, the Czech white goods market is expected to advance further in value which will also generate an increase in the market for related extended warranties BROWN GOODS Introduction Underlying market value and volume Czech consumers bought around 1.6 million items classifiable as brown goods in Manufacturers' original warranty length and consumer law Two-year manufacturer guarantees are the norm for brown goods in the Czech Republic Manufacturer schemes for extended warranties and insurance Apple, Samsung, Sony and Toshiba all run extended warranty programs for brown goods Retailer schemes for extended warranties and insurance FINACCORD 09/2014 I

2 All but one retailer scheme is outsourced to an external extended warranty or insurance company with five such providers visible in total Risk coverage of all schemes for extended warranties and insurance Cover for accidental damage is available in a minority of schemes Independent distribution channels Market value for extended warranties and insurance Market forecasts to Up to 2017, the underlying brown goods market will rise more by volume than by value and it is possible that the related market for extended warranties will fall back somewhat GREY GOODS Introduction Underlying market value and volume The expenditure by Czech consumers on grey goods dipped below CSK 5.5 billion in Manufacturers' original warranty length and consumer law Xbox is the only manufacturer to deviate from offering a two-year factory warranty Manufacturer schemes for extended warranties and insurance AmTrust and London General Insurance both hold partnerships with manufacturers Retailer schemes for extended warranties and insurance The internally-managed program of Datart is likely to be one of the largest in this field Risk coverage of all schemes for extended warranties and insurance Cover for accidental damage is available in a narrow majority of programs Independent distribution channels There is one independent option for Czech consumers seeking to acquire cover for grey goods Market value for extended warranties and insurance Market forecasts to By 2017, the annual sales volume of products classifiable as grey goods will have dropped to 1.5 million thereby pushing back further the value of the related extended warranty market MOBILE GADGETS Introduction Underlying market value and volume As in other countries, there is growing appetite for mobile gadgets among Czech consumers Manufacturers' original warranty length and consumer law No mobile gadget manufacturers offer a guarantee lasting more than two years from date of purchase Manufacturer schemes for extended warranties and insurance Just over a half of manufacturers surveyed have an arrangement for promoting extended warranties Retailer schemes for extended warranties and insurance but comfortably less than a half do so In this field, Česká pojišťovna is the leader by weighted share of partnerships Risk coverage of all schemes for mobile gadget insurances Cover for theft is available in a number of cases but cover for loss in none at all Independent distribution channels Market value for extended warranties and insurance Market forecasts to Between 2013 and 2017, both the underlying market value and volume are expected to rise further which will generate moderate growth in the related extended warranty and insurance market MOBILE PHONES Introduction Underlying market volumes Mobile phone subscriptions per capita advanced from 1.24 to 1.39 between 2009 and meaning that the number of individuals in possession of a mobile phone has also risen Manufacturers' original warranty length and consumer law In this arena, Czech consumer law is generally aligned with EU law FINACCORD 09/2014 II

3 Manufacturer schemes for mobile phone insurance Apple and Asus are the two manufacturers to promote extended protection Retailer schemes for mobile phone insurance Among major mobile network operators, only one (T-Mobile) has a mobile phone insurance program collaborating with Generali in this context Risk coverage of all schemes for mobile phone insurance Cover for both accidental damage and theft is quite commonly available Independent distribution channels Mobile phone cover can also be acquired in a variety of formats from a number of Czech banks Market value for mobile phone insurance Market forecasts to Mobile phone subscriptions per capita are on course to reach 1.50 by although the number of individuals with a mobile handset will only rise by 200,000 or so Faster growth in the insurance market is largely contingent upon the actions of mobile network operators FINACCORD 09/2014 III

4 LIST OF GRAPHICS / TABLES 0.0 EXECUTIVE SUMMARY... 1 Approximate market value for extended warranties and insurance linked to mobile and non-mobile consumer products in the Czech Republic, 2013 and 2017 (forecast)... 2 Approximate market value for extended warranties and insurance linked to mobile and non-mobile consumer products in the Czech Republic, 2009, 2013 and 2017 (forecast) (table) INTRODUCTION... 3 Organisations researched in the Czech Republic, segmented by type, Retailers researched in the Czech Republic... 5 segmented by distribution channel, WHITE GOODS... 9 Value and volume of sales of white goods in the Czech Republic, 2009 and Comparative length of original warranties offered by manufacturers of white goods in the Czech Republic, Manufacturer schemes for extended warranties and insurance linked to white goods in the Czech Republic: provision rates and operating models, Manufacturer schemes for extended warranties and insurance linked to white goods in the Czech Republic: unweighted and weighted provider share of partnerships, Retailer schemes for extended warranties and insurance linked to white goods in the Czech Republic: provision rates and operating models, Retailer schemes for extended warranties and insurance linked to white goods in the Czech Republic: unweighted and weighted provider share of partnerships, Risk coverage of all schemes for extended warranties and insurance linked to white goods in the Czech Republic, Approximate market value for extended warranties and insurance linked to white goods in the Czech Republic, 2009 and Value and volume of sales of white goods in the Czech Republic, 2013 and 2017 (forecast) Approximate market value for extended warranties and insurance linked to white goods in the Czech Republic, 2013 and 2017 (forecast) BROWN GOODS Value and volume of sales of brown goods in the Czech Republic, 2009 and Comparative length of original warranties offered by manufacturers of brown goods in the Czech Republic, Manufacturer schemes for extended warranties and insurance linked to brown goods in the Czech Republic: provision rates and operating models, Manufacturer schemes for extended warranties and insurance linked to brown goods in the Czech Republic: unweighted and weighted provider share of partnerships, Retailer schemes for extended warranties and insurance linked to brown goods in the Czech Republic: provision rates and operating models, Retailer schemes for extended warranties and insurance linked to brown goods in the Czech Republic: unweighted and weighted provider share of partnerships, Risk coverage of all schemes for extended warranties and insurance linked to brown goods in the Czech Republic, Approximate market value for extended warranties and insurance linked to brown goods in the Czech Republic, 2009 and Value and volume of sales of brown goods in the Czech Republic, 2013 and 2017 (forecast) Approximate market value for extended warranties and insurance linked to brown goods in the Czech Republic, 2013 and 2017 (forecast) GREY GOODS Value and volume of sales of grey goods in the Czech Republic, 2009 and FINACCORD 09/2014 IV

5 Comparative length of original warranties offered by manufacturers of grey goods in the Czech Republic, Manufacturer schemes for extended warranties and insurance linked to grey goods in the Czech Republic: provision rates and operating models, Manufacturer schemes for extended warranties and insurance linked to grey goods in the Czech Republic: unweighted and weighted provider share of partnerships, Retailer schemes for extended warranties and insurance linked to grey goods in the Czech Republic: provision rates and operating models, Retailer schemes for extended warranties and insurance linked to grey goods in the Czech Republic: unweighted and weighted provider share of partnerships, Risk coverage of all schemes for extended warranties and insurance linked to grey goods in the Czech Republic, Approximate market value for extended warranties and insurance linked to grey goods in the Czech Republic, 2009 and Value and volume of sales of grey goods in the Czech Republic, 2013 and 2017 (forecast) Approximate market value for extended warranties and insurance linked to grey goods in the Czech Republic, 2013 and 2017 (forecast) MOBILE GADGETS Value and volume of sales of mobile gadgets in the Czech Republic, 2009 and Comparative length of original warranties offered by manufacturers of mobile gadgets in the Czech Republic, Manufacturer schemes for extended warranties and insurance linked to mobile gadgets in the Czech Republic: provision rates and operating models, Manufacturer schemes for extended warranties and insurance linked to mobile gadgets in the Czech Republic: unweighted and weighted provider share of partnerships, Retailer schemes for extended warranties and insurance linked to mobile gadgets in the Czech Republic: provision rates and operating models, Retailer schemes for extended warranties and insurance linked to mobile gadgets in the Czech Republic: unweighted and weighted provider share of partnerships, Risk coverage of all schemes for extended warranties and insurance linked to mobile gadgets in the Czech Republic, Approximate market value for extended warranties and insurance linked to mobile gadgets in the Czech Republic, 2009 and Value and volume of sales of mobile gadgets in the Czech Republic, 2013 and 2017 (forecast) Approximate market value for extended warranties and insurance linked to mobile gadgets in the Czech Republic, 2013 and 2017 (forecast) MOBILE PHONES Volume of mobile phone subscriptions and subscriptions per capita in the Czech Republic, 2009 and Number of individuals owning a mobile phone in the Czech Republic and their weighting within the total population, 2009 and Comparative length of original warranties offered by manufacturers of mobile phones in the Czech Republic, Manufacturer schemes for extended warranties and insurance linked to mobile phones in the Czech Republic: provision rates and operating models, Manufacturer schemes for extended warranties and insurance linked to mobile phones in the Czech Republic: unweighted and weighted provider share of partnerships, Retailer schemes for extended warranties and insurance linked to mobile phones in the Czech Republic: provision rates and operating models, Retailer schemes for extended warranties and insurance linked to mobile phones in the Czech Republic: unweighted and weighted provider share of partnerships, Risk coverage of all schemes for extended warranties and insurance linked to mobile phones in the Czech Republic, Approximate market value for extended warranties and insurance linked to mobile phones in the Czech FINACCORD 09/2014 V

6 Republic, 2009 and Volume of mobile phone subscriptions and subscriptions per capita in the Czech Republic, 2013 and 2017 (forecast) Number of individuals owning a mobile phone in the Czech Republic and their weighting within the total population, 2013 and 2017 (forecast) Approximate market value for extended warranties and insurance linked to mobile phones in the Czech Republic, 2013 and 2017 (forecast) FINACCORD 09/2014 VI