Would you like some insurance with that phone?

• ‘The phone plays a completely different role in our lives now’
• Tecprotec aims to get 10% of mobile phone users in Malaysia

IT used to be that when you lost your handphone, you’d probably curse at the cost and at losing your contacts list, but you’d shrug and get on with it.
 
But as smartphones become more popular, more of our personal and professional lives are wrapped around our devices: Losing such a device has certainly become a big deal.
 
“The phone plays a completely different role in our lives now,” says Mark Simmons (pic), cofounder and managing director of Tecprotec Sdn Bhd. “It is a complete communications tool for my email, my SMS, my voice, my social media, my calendar – all of these functions, people can’t really live without them.”
 
This is where Tecprotec comes in, of course. The company offers a range of insurance products for mobile phone loss, damage and theft, all geared towards getting customers back to their mobile lifestyles as quickly as possible.
 
According to Gartner, 2013 was the year in which smartphone sales took over. The research firm said that smartphones accounted for 53.6% of overall global mobile phone sales in 2013, and exceeded annual sales of feature phones for the first time.
 
The popularity of the device was no different in Malaysia, with rival research firm IDC reporting that smartphone shipments accounted for approximately 49.6% of total mobile phone shipments for the first half of 2013, a significant jump from the 31.8% recorded during the same period the previous year.
 
In a report released late last year, IDC said smartphones are also forecasted to achieve 53.5% share in Malaysia for the year of 2013, and to attain an annual share of approximately two-thirds by 2015.
So many devices being used, and so much of our lives vested in them, you’d think that getting these devices insured would be a no-brainer, but that was certainly not the case when Tecprotec started in 2006.
 
In control of your destiny
 
The UK-born Simmons came to Malaysia in 1997, as managing director of The Cobra Group Plc Australia’s business in Asia, where he had been working since 1995. The company offered what he describes as a “third-party sales force solution.”
 
These were those pesky people at shopping malls and even petrol stations who try to sign you up for credit cards or mobile services. Simmons makes no apology for that. Clients did not have to employ a full-time sales force, nor train and manage them, while their customers “did not have to line up at banks to sign up for a credit card.”
 
Win-win. Simmons managed to grow that business to 1,000 fulltime employees, with blue-chip customers such as Celcom, TMnet, Astro, American Express, HSBC and Standard Chartered Bank, amongst others. There was a third ‘win’ too – it gave Simmons and his team knowledge of two key industries that are important to Tecprotec: Financial services and telecommunications.
 
He sold out of that business though, to focus on Tecprotec. What the what?
 
“The decision to sell out of the co-marketing business was that it was always dependent on external factors. Because you were always representing somebody else, and their product, if they changed that product negatively, sales went down; if they changed it positively, sales went up.
 
“You weren’t really in control of your own destiny. So I looked at businesses where you could really be in control of the product offering for your customers – give what we felt was best for the customer, and also look after that customer for the long-term.
 
“We wanted to create more value, we wanted to create a base of customers,” he says.
 
Tecprotec itself was born at a meeting Simmons had with the chairman of the insurance arm of UK-based The Carphone Warehouse Group. In the United Kingdom, it was shared, about 20% of users insure their mobile phones.
 
It was a market need that wasn’t being serviced in Malaysia at all. “When we looked at the mobile phone market in Malaysia and the mobile phone market in the United Kingdom, we saw that Malaysia was on the same track as the United Kingdom, which was just a few years ahead,” says Simmons.
 
“We felt confident that what was going to happen in Malaysia would be the same – people would become more vested in their personal devices, and therefore the need to protect them would become greater as well,” he adds.
 
The questions that Simmons and his team had to answer were: “Is there a need in the marketplace? Yes. Do we feel that we can fill the need? Yes. Do we feel that we can do it with a world-class standard … in line with what is available in the United Kingdom? And we thought yes, we could.”
 
So Tecprotec struck up a ‘technical agreement’ with Carphone Warehouse, which provided a ‘best-in-class’ blueprint to operate a mobile insurance product.
 
There were challenges, of course. Malaysians generally do not trust insurance companies, although that has changed, says Simmons. Mobile phone insurance itself was a hard concept to sell, and many were sceptical that such a business could take off in Malaysia.
 
“There is also a term in the insurance industry called ‘moral hazard,’ where you may see a lot of non-genuine claims,” says Simmons. “However, in this respect, we’ve found that Malaysia performs as well, if not better, than markets like the United Kingdom. We’re very pleased with the level of honesty here.”
 
Protecting digital lifestyles
 
Still, there was a good take-up rate initially, especially with enterprise customers. “We brought over what we call the ‘Rolls Royce’ model to Malaysia,” says Simmons.
 
“The mobile phone insurance market in the United Kingdom is a bit different – it has existed there for more than 25 years. It’s very much a staple part of the telecommunications landscape, and over that time the product (mobile insurance) has matured significantly, becoming more comprehensive and more robust.
 
“So when we brought it here, there was a very good take-up rate, but we also saw there was a need for variation,” he adds.
 
This is why Tecprotec also provides ‘lighter-cover’ products at more affordable monthly fees. Over the last four to five years, it has in fact developed a whole range of products.
 
“Our premium product customers would pay RM38 a month to insure a top of the range iPhone that would cover them against the risk of having their phone stolen, of accidentally damaging that phone, and it even covers the warranty of the phone so … even if the phone just stops working, it will be replaced.
 
“We protect all the data on that phone and back it up – so it’s a very comprehensive cover for your RM2,500 phone for two, three, six, nine or 12 months,” he adds.
 
But for those with RM500 phones, they might want to look at the lighter products, such as paying RM12 a month, “and even lighter products, where we only cover damage for example, for as little as RM4,” says Simmons.
 
“So what we’ve been able to do is to provide an element of protection for all levels of the marketplace,” he adds.
 
There are different components. You can have a replacement of the same model if stolen, for instance, within 24 hours. If the phone is damaged, as long as it was not intentional, Tecprotec will send a courier to collect the phone.
 
“We can promise the customer that within seven days we’ll collect, repair and return it, although typically it can even take less than five days,” says Simmons.
 
The company has also started an onsite repair service, where the technician will go to the customer’s office or home and repair the device within 30 minutes to two hours. This service is not available nationwide, and is only being offered in select areas in Kuala Lumpur at the moment.
 
Tecprotec also has insurance plans where it offers limited liability coverage – for instance, up to RM500 on the cost of a new phone.
 
The business
 
The company now has 120 full-time staff for its Malaysian operations, which also acts as a hub for its regional markets. It has rolled out in Vietnam and Indonesia, its next two biggest markets, and India as well. It says it has 300,000 customers in Malaysia, and about 600,000 in total.
 
“We would be keen on Singapore, if the right partner there is available,” says Simmons. “Thailand is also definitely on our radar.
 
“We opened up three new markets in one quarter, so that was a challenge. As soon as we consolidate these markets, Thailand would be our next stop,” he adds.
 
Given that 20% of UK users have some form of insurance for their devices, what’s holding the business back in Malaysia?
 
Tecprotec’s major distribution channels are the handset manufacturers as well as the mobile operators – Simmons says it has the four biggest ones in Malaysia on board.
 
“It’s a matter of priority,” he says diplomatically when asked why the operators aren’t doing more.
 
“If you look at our telco partners, in their key stores where we have a presence, we get a 30-40% acceptance rate, which is superb.
 
“Having said that, we only have a voice across a small segment of their user base. Our partners, now having seen that this is a successful programme, are expanding that, so we’re actually more than happy with the take-up rate – but what we need now is a wider voice. And that’s beginning to happen,” he adds.
 
Simmons says that this change is happening because operators are beginning to realise that offering mobile insurance can not only lead to greater customer satisfaction, but also reduce churn. Losing a mobile phone – and the SIM card in it – is usually a good opportunity for a customer to consider other operators … unless it is insured and immediately replaced, with the data intact.
 
“Ultimately, it can also be a profit centre for them,” he adds.
 
Tecprotec’s market is split between the four operators – some with greater traction with enterprise customers, others with consumers.
 
With the BYOD (bring your own device) trend becoming prevalent in the enterprise space, why not go direct to corporations?
 
“We have actually discussed this in terms of a distribution strategy; it is definitely a strategy, but we think not a primary one for us at the moment.
 
“The more relevant time to talk to someone about insurance is when they’re buying their phone, and working with our mobile partners is the more immediate opportunity for us,” he says.
 
Still, it looks like 2014 could be a watershed year for Tecprotec. It is expected to sign on another operator, and hopes to launch a platform-agnostic Tech Support service.
 
“When smartphones first came on the scene, they appealed to tech-savvy early adopters, but now they’re mainstream devices and many people are struggling with tasks like synching and resetting their phones,” says Simmons.
 
“We will be able to walk you through that,” he adds. “We will be able to provide, in cooperation with our mobile operator partners, a unified support experience across all models.”
 
Simmons believes that the take-up rate for mobile insurance in Malaysia is in the low single digits, as opposed to the 20% in the United Kingdom and the United States.
 
“We feel that getting to 10% is a very achievable mid-term goal, within the next three to five years definitely.
 
“We want to do it as it is done with McDonald’s, where they always ask you, ‘Would you like some fries with that?’ When you buy a mobile phone in Malaysia, they should ask you, ‘Would you like some insurance with that?’ ”
 
Related Stories:
 
2013: The year smartphone sales overtook the rest, says Gartner
 
Govt rebate a boost to smartphone demand in Malaysia: IDC
 
Phone diagnostics and repair, and the millions being wasted
 
Malaysia amongst most savvy, least brand-conscious smartphone markets: Study
 
 
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