Tesla’s Auto Insurance Will Use Individual Driver Data For ‘State-By-State Proposition’

Tesla Inc’s (TSA.O) will use individual customer data like GPS and camera footage to price new auto insurance products. This is reliable information from cameras and motor vehicle with details drivers can benefit from. Their new insurance plan will be based on driver’s authorization and rules of the specific state, a senior business govt cited recently.     

California is currently the most significant sector for Tesla with lower rates due to safety features on electric cars.  Tesla is also licensed as a broker to conduct business on behalf of the State National Insurance Company Inc, a unit of Markel Corp.

One of the strongest proponents for the car insurance rates is Chief Executive Elon Musk.  As more self-driving technology and driver-assist is implemented with advanced features such as cameras monitoring lane-keeping and recording vehicle surroundings, chances are more accurate data will be collected.

Unfortunately, U.S. insurers don’t have enough data to provide detailed information, lack consistent standards, and the driver’s unpredictable use of the systems and higher repair costs can get in the way. Tesla is currently one of the several manufacturers fully equipped with driver-assistance features such as cameras, lane centering, and self-parking.

Some insurance filings in California from back in May affirm that Tesla uses direct data feeds with the client’s permission. However, their site says that the data is anonymized data used to inform insurance rates, and it doesn’t use data from individual vehicles. The company is using the same data as other auto insurance companies such as driver’s age, years driving, safety record, and annual mileage.

Tesla will expand its insurance program to states with the population seeking their services, particularly California where the automaker claims about 30% cheaper premiums than their competitors. The new insurance division is run by insurance executive Matt Edmonds. Presently, Tesla has more access to direct driver data thanks to its fully automated vehicles. Their program doesn’t use individual data but rather anonymized aggregated data to generate quotes.  They plan to use more individual data in the future.

When it comes to pricing, they have improved with as much as 20 to 30% discounts, yet some owners complain they are receiving higher quotes. Tesla is trying to resolve these issues before introducing more innovative features based on more data from its fleet. So far, they come up in a list of the 25 most expensive cars to insure according to insurance cost per vehicle and insurance claim frequency. Last year, several insurance companies said they will increase their rates on Tesla’s cars.

Everyone seems very enthusiastic about the news. But there is still much to improve, and it might not be wise to become part of Tesla’s new auto insurance division now. It’s an entirely new business for Tesla, basically built around data, which they seem good at; and customer service where they have at times missed the mark. Overall, it’s good the company is working on resolving these issues before implementing more advanced self-driving features.

Sources
  • Tesla promises up to 30% lower rates with new car insurance play

  • https://www.reuters.com/article/us-tesla-markel-insurance/teslas-use-of-individual-driver-data-for-insurance-state-by-state-proposition-idUSKCN1VQ0FY

  • https://focuswashington.com/2019/09/05/teslas-use-of-individual-driver-data-for-insurance-to-be-determined-by-drivers-states/

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