PERUVIAN WARRANTY MARKET OVERVIEWPERUVIAN WARRANTY MARKET OVERVIEW

Article sponsored and written by Diego Sánchez Bluegex:

Diego Sánchez has a 22-year career in the insurance industry and 12 of them in Extended Warranty and loyalty programs in Perú and Chile.

The Extended Warranty industry in Perú started in early 2000s, with the introduction of the first service plans from one American company, the service was well received by consumer electronics specialists’ retailers but sadly they were disappointed by this company when it left the country with no prior notice and they were forced to face the challenge of managing the service contracts in force.

A few years after that, some other companies started the business again and it was hard for them to earn the trust of the major retailers, but they finally did and the industry really began. The implementation of an authorized service network was a real challenge in a very informal market such as the Peruvian, especially in the cities away from the capital, so it took a great effort to achieve it.

Despite of other countries in the region such as Brazil or Argentina, in Perú the Extended Warranty service is not considered an insurance but a service plan.

The Extended Warranty service plans are commercialized mainly for electronic appliances, nevertheless, there is also a very undeveloped market in the automotive side that started afew years ago.

For the electronic appliances, the plans cover manufacturers failures after the
manufacturers/supplier warranty periods end (which normally go from 3 months up to 1 year
depending on the brand) and for up to 4 more years depending on the appliance. For vehicles
the coverage starts once the vehicle reaches the end of the manufacturer ́s warranty up to 5
years including the brand ́s warranty.

We can find two specific ways to commercialize the service plans: optional and mandatory.
On the consumers electronics side it is almost 100% optional but on the auto side it could be
80/20 depending on the brand. The plans are tailor made for every specific client.

Currently we could find in the Peruvian market the following types of service plans:
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Extended Warranty for consumer electronics
Replacement programs (mainly for small appliances and cellphones)
Motorcycle Extended Warranty
Auto Extended Warranty
The service plans are mainly sold by retailers and auto dealers, there are currently very few
major retailers do not have have not a program in place. However, we just have started
seeing new online offers and we expect them to get stronger. The Extended Warranty
providers include in their offer permanent coaching to the sales teams and publicity as well.
The service plans have a nationwide coverage and with an authorized service center only.
What the retailers were looking for with the Extended Warranty service was to get their
customers closer, loyal and obviously improve their income from it. They found that the
revenues from the plans were very attractive, and the consumer’s perception of quality
improved strongly, the peace of mind the programs offered helped very much on the sales
side and helped the sales teams to increase their revenues.
The retailers quickly found that their clients were in expert hands to handle the claims, and
the efficiency the providers showed is now highly appreciated.
The Extended Warranty industry helps to formalize the market and delivers a great
experience to the consumers who have been used to taking care of their own appliances.
In summary, we could see that the Peruvian Extended Warranty Market is still a new one with
a lot to do in the following years but also one with much to deliver.