Is mobile phone insurance profitable?
Answer by Nauman Noor:
The short answer is Yes, very profitable.
Asurion ( ) is the primary insurance provider for the top 4 carriers in the US - they have also recently expanded to Europe through an acquisition about 3 years ago.
It is owned by the PE firms - an article in Businessweek circa 2010 ( ) alluded to net profits being around $500M on revenues of $3.8B (of which about $400M is paid to the PE firms, leaving a net profit of $100M).
It appears that for the most part, it is the only player (aside from Apple’s coverage for the iPhone) that the wireless carriers use, hence providing to a certain degree some pricing power in terms of fees charged as well as sourcing of refurbished units that it provides claimants.
Generally, as the article referenced mentioned, it is not a good deal for consumers given the payments involved, the deductibles applicable and the replacement value of the refurbished insurance.
Hope this helps!