Mobile companies to offer insurance plans…!

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Nokia and Micromax takes the plunge…

Finnish mobile phone maker Nokia has tied up with state-run New India Assurance to offer Indian customers insurance cover against loss and damage of their devices.

The insurance plan was announced by Nokia India on Tuesday. The move prompted a rival Indian phone maker to say it would introduce a more “exhaustive” plan soon.

At present, none of the players in the Rs 30,000-crore Indian handset market offer an insurance cover.

Kannan Gopalakrishnan, Nokia India’s director for retail sales, said people purchasing handsets from Nokia-branded retail stores will be offered on-the-spot insurance cover at 1.25% of the price of the handset. The plan, which has a minimum premium of Rs 50, will come into effect from Thursday.

Nokia’s bigger rivals-Samsung, BlackBerry and Apple-do not offer any insurance cover bundled with their handsets. Executives at Samsung and BlackBerry refused comment on whether they have any similar plans.

Nokia’s insurance plan safeguards against theft, burglary, accidental or deliberate damage by a third party or damage caused by accidental entry of fluid in the internal circuitry.

Gopalakrishnan said the company’s insurance plan could influence consumer-buying patterns. “In the long term, we expect to have a stronger engagement with the consumer post purchase of the product.”

According to industry data, Nokia was the leader in the Indian handset market with 22.2% share as of September last year. It was the second largest player in the smartphones segment with 19.2% share.

“Insurance of household articles, cars, jewelry and other items has been around for decades. However, mobile phones are only picking up now as sales of big-ticket smartphones like the iPhone 5 and Samsung Galaxy S3 have risen exponentially over the past year,” telecom sector analyst Kunal Bajaj said.

Smartphone sales in India doubled to 15.4 million in 2012 from 7.8 million in 2011, according to research agencies IDC and GfK. IDC suggests that by 2016, smartphone penetration would be as high as 57% of the overall mobile phone sales in the country, compared to 2.5% in 2012.

A senior executive at Micromax, who did not want to be named, said, “We are looking at offering simplified customer ‘assurance’ plans that will include insurance among other features.”

Insurance of mobile phone devices had been tried before by HTC and LG, in 2008, but the companies withdrew the plans due to high false claims and the difficulty in verifying claims.

An executive from LG said that the company had no plans of reintroducing insurance offers.

The executive from Micromax said the “lost rate” in India is very high, especially in big cities, which opens up the “need for service” element and having an insurance cover.

According to Norton’s Mobile Survey, 43% of Indians have lost their mobile phones one time or the other, with 59% of them losing it. It added that 70% of mobile phone users were willing to pay Rs 14,000- 15,000 to recover the device and information in the handset.

Perhaps the reason why, promoted by the Spice Group, was able to sell insurance plans to 400 customers since it launched the plan last week. Chief executive officer Rajneesh Arora said the there was a great demand among consumers and the absence of standalone insurance plans had given rise to a number of channels through which consumers can obtain such plans.

An executive with a handset maker added that insurance plans were not new innovation and large retail chains that deal in electronics, for example Sangeetha in Karnataka, have been offering such covers for some time now.

Insurance of handsets offered in other countries like the US where operators offer subsidy on handsets and control sales. It is easier to verify claims since handsets are locked to the operator network. It is in the interest of the carrier to process claims quickly and ensure that the customer keeps using a mobile phone, Bajaj added.

However, in India, a very limited number of insurance plans for handsets in the market is evidence that insurance companies are not keen on servicing this line of business where verifying ingenuity of the claim is much tougher. “The cost of booking the policy is always higher than premium and there needs to be certain volumes to offer the cover,” said ICICI Lombard’s head of underwriting and claims Sanjay Datta. He added that the company therefore offers insurance for mobile handsets only for enterprises that purchase in bulk for their employees.

Saholic offers insurance against theft or burglary of for all mobile handsets and tablets offering voice calling facility, anywhere in the world. A customer would have to pay 1.5% of the cost of the device for purchasing the plan which will be valid for year.

In Nokia’s case, the offer is limited to its branded retail stores and will begin from six cities including the metros of Delhi, Mumbai, Chennai and Kolkata and cities of Bangalore and Hyderabad.

Customers buying the insurance will be offered additional services such as free pick and drop of device in case of damage and documents in case of loss or theft, cashless processing of claims and standby handsets and chargers in the interim.

The insurance plan will be valid for a year after which customers can seek a fresh plan from the insurance provider. However, this plan would not have the same terms and conditions, said NIA general manager Segar Sampathkumar.

To begin the claim process a consumer need only submit an acknowledgment of the police complaint along and report loss of SIM to the service provider.


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