
Tesla has created a customized insurance package - IgorPartola
http://www.businessinsider.com/tesla-liberty-mutual-create-customize-insurance-package-2017-10?r=US&IR=T
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thisisit
Insurance as a business relies a lot on past actuarial table data to draw up
algorithms to price the premiums. It contains factors like gender, age,
occupation etc and the car, which is the highlight here.

If insurance companies do find data supporting the fact that these cars are
less prone to payouts, due to Autopilot, they will decrease the premiums. So I
am confused what is this whole "car insurance world upside down" all about?

The interesting is this:

> "If we find that the insurance providers are not matching the insurance
> proportionate to the risk of the car then if we need to we will in-source
> it," Tesla CEO Elon Musk said in February.

So Tesla as a business recognizes the cost of car has gone up due to insurance
and might be actively working on subsidizing the costs.

It can either by paying some part of insurance or providing data on crashes.
If it is latter, you have to wonder what kind of business Liberty Mutual is
running. Any company will always say their wares are safer but it's up to the
insurance companies to collect data and verify.

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dbrian
He is implying that the algorithms used by insurance companies are optimizing
for profit instead of solely accessing the risk of payout. In other words,
Tesla drivers are willing to pay a higher premium to mitigate the same risk.

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dogruck
In the competitive car insurance market, how can you optimize for profit
without incorporating the risk of payout?

~~~
afarrell
Thats not what the parent is saying. The parent is saying that, in the same
way that retailers might act on the knowledge that OSX users are willing to
pay higher prices for goods, insurers act on the knowledge that Tesla drivers
are more risk-averse.

~~~
Spooky23
Its a pretty bold accusation. Car insurance is probably the most competitive
market out there.

Why would dozens of car insurers in multiple states collude to hurt poor Tesla
and put themselves at risk of Federal and State sanction? If they were doing
that for a tiny niche automaker like Tesla, why wouldn’t they screw over BMW
or Lexus?

This whole controversy is just a distraction to draw attention from Tesla’s
service practices and support for a integrated “car as a service” model where
Tesla owns financing, sales and insurance.

~~~
afarrell
> why wouldn't they screw over BMW and Lexus?

Because Tesla markets itself as "the safest car on the road".

> collude

Who is saying anything about collusion?

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Spooky23
So did Volvo for decades. You didn’t need magic Volvo insurance.

When you have a highly competitive market, and most participants decide to
make an identical business decision that isn’t in their competitive interest
(ie charge a high margin for a commodity), that’s generally accepted as
evidence of collusion.

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whamlastxmas
I think the more likely reason rates are lower for Teslas is that they log
everything happening and send it remotely to Tesla. If someone gets in a wreck
and is at fault it's going to be a lot easier for the insurance to see this
and deny non-comprehensive coverage.

~~~
matt_wulfeck
I don’t think that what you’re describing is a significant cost to insurers.
Many (most) accidents are shared responsibility. And if you get full coverage
(assuming people with Tesla’s generally get full coverage) insurance covers it
regardless of whether or not it’s your fault.

The article says that autopilot reduced accidents by 40%, and Elon Musk seems
to be frustrated that they’re not taking this into account when determining
risk.

~~~
djrogers
Perhaps this varies by country, but in the US I’ve never been involved in an
accident where either insurance company looked at it as a ‘shared
responsibility’. In fact, in each case a significant amount of effort was
expended to prove fault and determine which insurance company was going to
pay.

~~~
jayd16
It also varies state to state.

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justinph
This doesn't seem very innovative to me. Insurance companies are already
taking this into account. I recently purchased a new vehicle (Subaru) with
active safety features (EyeSight). The insurance is the least I've ever paid,
by a pretty decent amount. The insurance company (Geico) specifically asked if
I had the EyeSight package when I signed up.

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jostmey
Quote: "The National Highway Traffic Safety Administration found that crash
rates for Tesla vehicles have plummeted 40% since Autopilot was first
installed."

~~~
ucaetano
"that crash rates for Tesla vehicles"

"for Tesla vehicles"

You'd need to compare this to vehicles from other brands that have had
Autopilot-like features for over a decade to actually get a sense of the
number, otherwise, it is meaningless. That's like saying:

"Cars with ABS have lower crash rates than same cars without"

~~~
sdenton4
Why is the comparison necessary? My understanding is that insurance should be
factoring in the expected value of accidents, which is an absolute
measurement, not a relative one.

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thomas_howland
There is also the fact that Tesla purchasers tend to be from high
socioeconomic classes, even more so than the baseline (extremely predictive)
education / occupational category / credit score triptych would indicate. Most
insurance risk predictors map directly to SES.

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neurotech1
The high cost of insurance is partially due to high repair cost. Repairing
aluminum car panels is expensive relative to standard steel panels.

Autopilot significantly reduce the crash rate, and Tesla feels other insurance
companies don't sufficiently factor this when setting rates.

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moonka
>Its benefits include replacing Teslas damaged beyond repair within one year.

I don't understand. Most people's insurance will cover the replacement value
of your car if it is in an accident. Is this referring to something else?

~~~
greglindahl
I've never had a car policy that covers the replacement value of the car.
Instead, it covers the value of the car. Big difference.

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uptownfunk
Insurance companies are actually undergoing something of a silent revolution
in terms of underwriting policies. Many of them are upgrading to some
sophisticated machine learning algorithms instead of the traditional actuarial
tables. Assuming tesla cars are really safer you would see the algorithms pick
up on that (there may be some lag until they catch on) and then price the
policies appropriately, assuming that the insurance company is willing to pass
that value to the customer.

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jpalomaki
Another thing is insurance which takes into account how much, where and how
you drive. Smart car companies like Tesla are in good position to start
offering these as well.

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Animats
_" Its benefits include replacing Teslas damaged beyond repair within one
year."_

They make you wait for a year to get a replacement car?

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jhurliman
I just got a quote (Model X, California) that is 42% higher than my current
monthly premium through USAA :-/.

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sschueller
"which lowers overall insurance costs by factoring in the vehicles' Autopilot
safety features"

Are they saying the autopilot makes the care safer? Hasn't the opposite
occurred? [1]

[1]
[https://www.ntsb.gov/news/events/Documents/2017-HWY16FH018-B...](https://www.ntsb.gov/news/events/Documents/2017-HWY16FH018-BMG-
presentations.pdf)

~~~
znebby
No. Perhaps in a couple of cases, but on average, I believe it has shown to be
safer.

~~~
lisper
From the original article:

"The National Highway Traffic Safety Administration found that crash rates for
Tesla vehicles have plummeted 40% since Autopilot was first installed."

~~~
rsynnott
Are there actually enough crashes involving Teslas for this to be
statistically useful? It’s not a particularly common car brand.

~~~
SerLava
You don't need that big of a sample size for the results to be significant. A
lot of people overestimate the sample size you need.

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perl4ever
I don't understand what the maintenance costs have to do with the price of
insurance.

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emondi
Maybe an incorrectly maintained car is less safe.

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jaclaz
Dupe, previous:

[https://news.ycombinator.com/item?id=15524800](https://news.ycombinator.com/item?id=15524800)

~~~
sctb
The previous story probably didn't get enough attention to qualify this one as
a duplicate, so we've left it. (See
[https://news.ycombinator.com/newsfaq.html](https://news.ycombinator.com/newsfaq.html))

