American Express Launches Purchase Protection Program
NEW YORK (AP) _ American Express Co. on Tuesday began offering all its domestic credit-card holders free limited insurance on almost any retail item charged on its card, in another attempt to grab a bigger market slice as the lucrative holiday season nears.
The unprecedented Purchase Protection service comes about a year after American Express began a first-of-its-kind Buyer’s Assurance program, which doubles, up to a year, the manufacturer’s warranty on certain products bought with the card.
Ed Cooperman, president of American Express’ Consumer Card Group, said the newest service picks up where the buyer’s assuarnce leaves off, insuring most puchases against theft, fire, accidental damage or loss for 90 days after the purchase date.
″There are no other cards that provide this kind of protection anywhere,″ Cooperman said in an interview. ″I think it’s a major step in the retail side of our business. We’ve traditionally been a travel and entertainment card.″
Spokesmen for the two big competing bank cards, Visa International and MasterCard International, said there were no immediate plans to offer similar services. They dismissed American Express’ latest program as a desperate attempt to bolster slipping market share.
Earlier this year, American Express began issuing its Optima card, which, unlike its regular charge cards but similar to bank cards, allows cardholders to pay their balances over time.
American Express currently has about 26 million cardholders worldwide, compared with Visa, which has 156 million, and MasterCard, with 135 million.
In the third quarter, American Express’ after-tax profit fell to $265 milion from $293 million last year. However, its American Express Travel Related Services Co. subsidiary, which runs its credit-card operations, saw its third-quarter profit jump 15 percent to $205 milion from $178 million.
Morris A. Perlis, executive vice president and general manager for American Express’ Personal Card Division, said the buyer’s assurance program had been profitable so far.
Perlis said a survey conducted shortly after the buyer’s assurance program was introduced found that card purchases of items carrying warranties rose about 25 percent.
Beginning Tuesday, certain items charged with an American Express card by domestic cardholders became automaticaly covered under a policy issued by Philadelphia-based Insurance Company of North America, up to a maximum limit of $50,000 per customer. National Warranty Corp. of Denver was contracted to administer the plan.
The free service is scheduled to run through May 23, American Express said.
Purchase Protection covers most card purchases, except things like travelers checks, tickets, animals or living plants. As with most insurance policies, there also is no coverage for loss or damage due to natural disasters like floods or earthquakes, war, normal wear and tear and abuse, among other things.
American Express said claims must be filed within 45 days. Existing insurance policies would supersede its coverage, although American Express’ service would pick up where they left off, for instance, by paying a deductible.