APP sits in Allstate’s protection services unit, which also includes dealer services, as well as roadside and identity protection. The unit saw in-force policy growth of 8.9% last year, driven by APP’s international growth, new retailer relationships and a move into appliance and furniture protection.
To put the numbers into perspective, Allstate’s total premiums in 2021 were $45.8 billion, with APP accounting for just under 4% of this.
It may not be the largest slice of the Allstate pie, but APP’s total premium, at $1.8 billion, has grown sixfold since it was bought by the carrier five years ago – this is according to Allstate’s 2021 annual report.
Then known as SquareTrade (as it is still known outside the US), APP had already cemented itself in America when it was bought by the carrier. The business is also active across Europe, Australia and Asia.
“Our sweet spot is retail in the US,” Wiley said. “In the US, the vast majority of our customers are the major electronics and big box retailers.”
Outside of the US, most of its customers come through mobile carriers.
Recent partnerships include a deal with Japan’s SoftBank on Google Pixel phones – Wiley said this is the “first time” the multinational has outsourced its protection cover – and with Elkjøp, the largest electronics retailer in Scandinavia.
Other big-name partners include Three in the UK, MediaMarkt in Europe, JB Hifi in Australia, and Telenor in Scandinavia.
APP’s proposition is to provide a branded service, twinned with technology, to provide a “fast, reliable service at a lower cost”, Wiley said.
“There’s never been any reason for us to believe that formula would be any less successful outside of the US market, particularly in Europe and Asia-Pacific where you’ve got very well-developed mobile phone industries,” said Wiley.
The business has big ambitions, and Wiley identified opportunities to grow across all geographies including in the “huge” Japanese market.
While, according to Wiley, the service can add value across regions, customer and partner expectations do differ.
In Europe, there is a greater focus on sustainability though this is a trend that is beginning to raise in “prominence” across other markets, particularly the US.
Traditionally, device protection has focused on replacing broken items, but in Europe the emphasis is increasingly on repairs.
“Repair is one of the most sustainable things you can do when it comes to device protection, because it prolongs the life of the device – and the longer people hold on to devices, the fewer of them end up in landfill,” Wiley said.
While a replacement can be quickly executed, Wiley said that in his view it is not necessarily the “best customer experience”, giving the example of someone getting a new phone and having to take the time to familiarise themselves with the device and reinstall apps.
Providers are increasingly looking at ways to speed up the repair process through options such as APP’s same-day, on-site repair service, through which it can dispatch technicians to meet policyholders at home or a local coffee shop to carry out simple fixes, such as mending a broken phone screen.
Sustainability concerns have also led some retailers to bring parts of their service, such as protection and trade in, together.
“Rather than retailers or mobile carriers having five different partners for different bits of the service, they’re really turning to more one stop shop, integrated service providers,” according to Wiley.
APP’s JB Hifi partnership, for example, sees it provide both the trade-in service and device protection.
“We’re doing that increasingly, across the globe,” Wiley said.
Over the past 10 to 15 years, service speed in the US has overtaken that of other markets, buoyed by technological tools and innovation, according to Wiley. Slow service and traditional warranty products have negatively affected the cover’s reputation in the past, he said.
Europe is “starting to catch up” when it comes to faster repair solutions, Wiley said.
“When we entered the market, it was the same thing as it used to be in the US. It was ‘we’ll repair your phone for you, but it’ll take two weeks’.”
Japan, meanwhile, is about five years behind, Wiley said, and consumers have been “tolerating incredibly bad service” such as two-week turnarounds and expensive deductibles.
“Despite whatever reputational issues there are, most consumers buy protection for their mobile phones in Japan,” said Wiley. “They’re very risk averse, so they really want to have that cover.”
Individual consumers’ wish lists also differ – some may want comprehensive cover, while others may just want peace of mind in the case of a broken screen.
Offering flexibility – but not too much choice – is key, according to Wiley.
“The old classic good, better, best is a great approach, because it allows customers to choose the coverage that they want [without being confusing],” he said.
Wiley in part attributed the business’s “off the charts” growth over the past two years to the COVID impact.
“The underlying demand for the products that we cover increased dramatically during COVID,” Wiley said. “And we’re now comping that where things have come back to a very comfortable but normal water level.”
In the US, where restrictions were placed on stores, as consumers – whose spending habits changed and with wallets that were in cases boosted by stimulus checks – flocked online to buy electronics. Mobile phone sales, on the other hand, were hit as would-be customers were blocked from shop floors, a trend that Wiley said has since reversed.
“In general, people have been wanting to get that protection because they’ve been buying these higher ticket items,” Wiley said.
Supply chain issues that affected some manufacturers have begun to normalise, according to Wiley, but this also had an impact on sales.
COVID temporarily changed the claims landscape, with summertime phone damage claims sliding. Meanwhile white goods claims increased as people spent more time at home using appliances, the APP CEO said.
“It does make one’s life a little bit tricky when you’re trying to predict where the business is going in the future, because some of these things are trends that stay, and then some of them are things that reverse themselves over time as things get back to a new normal,” said Wiley.
Source: Insurance Business Magazine