
Tesla Insurance - nopriorarrests
https://www.tesla.com/blog/introducing-tesla-insurance
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GeertB
This is the right model for insurance: the potential reduction of claims
incentivizes the car manufacturer to make cars safer and less expensive to
repair.

Flip side: from its telemetry, Tesla can derive how safely you drive your car
and adjust premiums accordingly. Is this good or bad?

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syntheticcdo
For one, that would be illegal in California. Outside of that, as long as it
was opt-in, I think it would be appropriate. Progressive at least has been
doing this for almost a decade.

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Hydraulix989
What does opt-in mean here? You are still free to insure your Tesla with other
insurance providers like Progressive or Geico.

Metromile tracked my vehicle's speed in their app using their ODB dongle. The
only way I could opt out of them knowing about my 101 MPH joyrides on the 101
was by choosing a different insurance company.

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dagw
Is this actually Tesla running their own insurance company or just Tesla
selling Tesla branded insurance backed by an existing insurance company.

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echadwickb
From the rate filings available from the CA DOI page[1], it appears they are
being "fronted" by State National Insurance Co (recently acquired by
Merkel[2]). "Fronting" is a new concept to me, but seems to be a special type
of re-insurance[3].

1\.
[https://interactive.web.insurance.ca.gov/warff/front](https://interactive.web.insurance.ca.gov/warff/front)
2\.
[https://www.insurancejournal.com/news/national/2019/05/02/52...](https://www.insurancejournal.com/news/national/2019/05/02/525317.htm)
3\. [https://www.captive.com/news/2018/11/12/what-is-fronting-
arr...](https://www.captive.com/news/2018/11/12/what-is-fronting-arrangement-
why-do-captive-insurers-use-them)

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phonon
Markel, not Merkel.

No, fronting is not reinsurance. It's basically a licensed insurance company
that is "leasing out" its license/assisting in regulatory/filing matters for a
small percentage of the premium.

Tesla doesn't want to set up an actual insurance company, so it's easier to
reuse an existing one.

Almost certainly there is a reinsurer involved as well (that hasn't been
publicly disclosed), as Tesla likely doesn't have excess capital available to
fund the surplus requirements for this auto insurance line.

[https://www.insurancejournal.com/news/national/2019/05/02/52...](https://www.insurancejournal.com/news/national/2019/05/02/525317.htm)

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benj111
This seems like a strange move on Teslas part.

Insurance is a business of quantifying risk, charging people appropriately and
making your money by investing those sums before claims are paid out.

That doesn't seem like a great fit for Tesla. They cant reasonably invest all
that money in Tesla and Tesla bonds, Tesla just becomes a confusing story of
car maker and insurance that won't be greater than the sum of its parts.

As others have mentioned, prices indicate this isn't some Muskian disruption
of the market so why the distraction? Am I looking for reason in what is
intended to be a nice little earner on the side?

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clickbyclick
When the car drives itself, why is the driver accountable?

This feels like a first step towards aligning insurance based on what/how you
drive vs. autonomous.

I could see: $.01/mile with autonomous and $.05 human.

Great lever to allow the robots to take over.

~~~
benj111
If the driver is accountable by default, why would Tesla want to take on the
liability?

This is all hypothetical anyway because Autopilot still requires you to pay
attention.

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dahdum
Given the rates aren’t at all competitive, I wonder if this is more an attempt
to generate positive cash flow than provide the service.

They do have the advantage of controlling replacement part pricing. They can
raise those even higher to drive up competitor rates and pocket margin either
way.

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ricardobeat
Why do you say the rates are not competitive (vs the 20-30% mentioned in the
release)?

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electriclove
Too bad it seems that 99% of the quotes people are getting are higher than
their current insurance. It's a great idea but the prices need to reflect the
savings that are being touted on the announcement.

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ckdarby
Source? Didn't see anyone on HN saying this.

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electriclove
Twitter, r/teslamotors, teslamotorsclub.com, teslarati, electrek

The website now says they are updating their algorithm.

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tenpies
What's the over/under on this "update" of the "algorithm" taking at least
until 2020?

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notfromhere
3 months maybe, 6 months definitely

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enahs-sf
I think for this to be truly successful, Tesla would need to vertically
integrate better.

that is:

\- run the insurer which effectively bet against you crashing your car

\- the repairs, we can fix it better/faster/cheaper than 3rd party

\- and obviously the manufacture and distribution levers.

Seems like it's an economy of scale problem, but given all the data that they
have about their cars/drivers and rates of accidents, they probably can say
with some degree of statistical certainty that they can cover their losses
paying out on claims; otherwise they probably wouldn't have done this.

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woodandsteel
My understanding is that Tesla is doing this because it believes that car
insurance companies are charging rates that are too high because Tesla's cars
and its whole business model are so different from the ones they are used to
insuring and so they don't properly understand them.

It will be interesting to see if Tesla is right about this and it can charge
lower rates without losing money.

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torpfactory
Maybe an interesting idea: with a very granular understanding of crash types,
Tesla could add active software features to reduce their occurrence rate and
pocket the savings.

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londons_explore
It could backfire though. A severe crash that paralyzes the driver is much
more expensive than one where the driver dies.

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Marsymars
On its face this seems like the incentives are wrong. We should be making
liability for killing someone always higher than liability for paralyzing that
person.

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yohann305
this makes total sense. If Tesla cars are safer than most, then the insurance
price should be lower since there would be less accidents in general and Tesla
owners don't have to pay for the "less safe" cars within the same insurance
umbrella.

It also makes sense for Tesla to have their own insurance company if they want
to someday have "insured" self driving cars and deal with the fact that in
case of accidents where cars are not driven by people but by algorithms.

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tomatocracy
Except that unfortunately all of the following can be (and I wouldn't be
surprised if they are) true: (i) Tesla cars are safer than most, (ii) Tesla
drivers are safer than most, (iii) Tesla accidents cost insurers more than
average, more than offsetting (i) and (ii). (You could also possibly add (iv)
Tesla drivers are more likely to be located in states/countries where running
an insurer is more expensive).

The cost (to the insurer) of providing car insurance isn't about how "safe" a
driver is, it's about a combination of (1) how likely they are to make a claim
(including accidents which aren't their fault - locality plays a part here -
and thefts etc), and (2) how much will the average claim costs their insurer
(and repair costs factor in massively here).

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693471
I imagine having the insurance under Tesla umbrella could make repairs cheaper
in certain scenarios

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londons_explore
If Tesla did quicker & cheaper repairs on cars insured by them, would that be
illegal?

It would harm competing insurance companies significantly, and mean they can
effectively corner the entire insurance market for their own cars.

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693471
They get to source the parts at cost. I don't think that's illegal really.
It's kind of like AppleCare, right?

