Tesla CEO Elon Musk made the announcement during the Q&A sessions of the company’s latest earnings call
In another sign of the melding of frontiers between insurance and other industries, Tesla CEO Elon Musk has announced that the automotive and energy company is making an imminent foray into selling its own auto insurance product . The announcement came during the Q&A session of the Q1 earnings call for Tesla and in response a direct question to Mr. Musk asking, “Whether Tesla was considering creating an insurance program in order to further simplify the ownership experience” as well as to take into account the fact that the insurance market is “very unreliable for Tesla owners.”
In response, Mr. Musk said that Tesla will be rolling out its own proprietary insurance product in “about a month and that it would be “more compelling than anything else out there.” In an elaborating on the new product, he noted that Tesla is essentially using the wealth of knowledge it already has amassed about the drivers of its vehicles and which it will continue to amass through through the increasing sophisticated AutoPilot system. He said Tesla already shares some of that information now for example to help with insurance company rates.
Stating that Tesla has substantial informational arbitrage via their constantly developing AutoPilot system, the company has an unparalleled “risk profile of customers” that essentially no other insurance company could match. Using that profile, Mr. Musk says that the company plans to offer Tesla Insurance to its drivers, “who have to agree not to drive the car in a crazy way…or they can, but the insurance rate is higher.”
There is a copy of Tesla’s filing with the Division of Insurance floating around on Reddit, but Agency Checklists did not review it since we did not officially obtain it ourselves and cannot verify its accuracy.
A news sites that says that they have obtained and reviewed the filing however, is Reinsurance News. In article published on their website this week, the online site says it reviewed a copy of the 4,000 page filing with the California Department of Insurance. The filing revealed that Markel’s State National Insurance Company will be the insurer behind The Tesla Private Passenger Auto program offering “…private insurance policies for “autos with Advanced Driver Assistance Systems (ADAS) in the State of California”.
The insurtech daily news site, Coverager, also links to a one page search result on the program as well in its update on Tesla’s announcement.
During the call, Mr. Musk made no mention about the current InsureMyTesla program the company has with Liberty Mutual.
Part of Tesla’s long-term plan to disrupt the enter automotive buying and driving experience
The decision to sell its own auto insurance is not a new one for Tesla. Tesla Insurance Services Inc. has been incorporated in the state of California since June 22, 2017 and will mirror what Tesla has been quietly doing in the Asian market. As quoted in an article on the Tesla fan-site Teslarati, Tesla VP of Global Investor Relations Jeff Evanson, spoke then about Tesla’s plans for its own insurance product during the company’s 2016 earnings call when it said begun looking into personalized insurance policies for each vehicle sold.
“We’re actually currently doing that. We’ve been doing it quietly, but in Asia in particular where we started this, now the majority of Tesla cars are sold with an insurance product that is customized to Tesla, that takes into account not only the Autopilot safety features but also the maintenance costs of the car. It’s our vision in the future that we’ll be able to offer a single price for the car, maintenance and insurance in a really compelling offering for the consumer. And we’re currently doing that today.” said Evanson during the earnings call.
Ultimately, insurance is just another part of Mr. Musk’s plan to disrupt the entire automotive experience. In addition to innovating how cars are made and how they run, Tesla also is looking to include future maintenance costs into the price of its cars along with insurance. As the Teslarati articles aptly argues “Tesla’s ‘one price’ program in Asia is consistent with Elon Musk’s overall philosophy. He wants to make the car buying and car owning experience one seamless transaction that gives customers peace of mind so they can simply drive their cars and enjoy them.”
Tweets about the new Tesla Insurance
The company also announced that it would be launching a robo-taxi fleet, which combined with this insurance product, would be an attractive ride-sharing insurance options for owners. Definitely interesting times in insurance. Agency Checklists will update our readers on the official launch of the new product.