SHOPSMART AUTOS – CUSTOMER INFOTMATION – MAY 23, 2021(PT.1)
How Tesla plans to cut customers’ insurance costs: Tap into Autopilot
Tesla Inc. CEO Elon Musk is turning to the insurance business in an attempt to achieve what the automaker has so far struggled with on the vehicle pricing front: lower costs for customers. Tesla says it will start offering insurance this month that taps internal data from the AutoPilot driver-assist system to reduce rates. Musk, on Tesla’s first-quarter earnings call, said the product would “be much more compelling than anything else out there.” The thinking, experts say, is that Tesla can offer lower rates because AutoPilot will decrease the frequency of collision claims. The automaker would have a better determination of how safe drivers are based on how often they use AutoPilot and could adjust rates more easily than other insurers. Bottom of Form “They have a lot of confidence in their ?AutoPilot system,” Jessica Caldwell, executive director of industry analysis at Edmunds, told Automotive News. “It seems as if they want to position that as their unique selling point. Offering insurance that takes it into account is fairly unique.” The automaker has partnered with Liberty Mutual since 2017 on a program called InsureMyTesla, although it’s unclear whether the new insurance product would be connected. While details remain scarce, State National Insurance Co., a subsidiary of Markel Corp., has said it will manage the product. According to a filing with the California Department of Insurance, State National said the Tesla-branded insurance would include, among other features, a customer-permitted direct data feed that would “eliminate frictional costs and inefficiencies inherent in traditional insurance processes.” The filing also said that “vehicles equipped with an autonomous feature option will be eligible for credits based on the level of autonomy of the vehicle.” The automaker intends to eventually offer self-driving vehicles, although AutoPilot does not have that capability today.
Musk, on the April 24 earnings call, said if a driver uses the vehicle “in a crazy way,” Tesla could raise that customer’s insurance rates. While auto insurance rates vary greatly and depend on factors including age, location and driving history, Teslas have generally been more expensive to insure than competing vehicles because of their technology and parts costs. According to 2018 data from the Insurance Institute for Highway Safety, the Model S sedan topped a list of the 25 most expensive vehicles to insure. Meanwhile, a 2019 study by Insure.com ranked the Tesla Model S as the 15th-most costly vehicle to insure in the nation, with an average annual premium of $3,300.
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