Most electronic or mechanical devices sold today are accompanied by a guaranteed warranty cover which provides free replacement/repair to the device within the warranty period. Hence, there is a liability for the manufacturer or retailer due to the costs involved in providing these services.

By taking into account the past experience of the manufacturer, we help build models that help determine the liability pertaining to future replacements/repairs that would need to be carried out. The expected frequency of payouts and an average amount of payout is calculated which is then projected into the future in order to calculate the liability pertaining to the products that are still covered under warranty.

Our models are prepared in order to factor in the relevant features of the warranty provision scheme and also to take into account any future expected changes such as inflation, mortality improvements etc. Our major clients in this field include suppliers who offer warranty on replacement or repairs of electronic or medical equipment. However, the principles and technique can be applied to all such products by tweaking the model to account for the bespoke features of each product and scheme.