Tesla Insurance

[Buckminster]

Lots of synergies. For me, it is a necessary feature of TN. TN drives most of Elon's decisions I believe:

 

[Buckminster]

Complete speculation.

The goal of Tesla insurance may not be making money rather than make the user experience better. Just imagine the moment you're rear ended, two seconds later your insurance company already obtained the other party's license plate, and submit a claim to his or her insurance with video evidence.

And maybe other car companies want to follow suite if they found it appealing.

What does that mean to Mr. Buffet's insurance business?

I think an impossible to ignore stat will be the fault ratio. Every collision will have video. If FSD has been deemed good enough to gain regulatory approval, it will very quickly become apparent that of every 100 accidents, more than 90 were the fault of another party (driver, cyclist, biker, pedestrian, road crew).

Insurers will notice that they pay out to Tesla (insurance division), but rarely if ever collect from.

 

[stretchsje]

Insurance companies compete to attract the safest drivers. This is why they pour millions into developing driver-monitoring phone apps, so they have the data from which to do this. Tesla has those data and more, all of it much cleaner from the car's sensors, plus they are selling cars that Elon believes have software smart enough to confidently intervene in the event of human error. This implies Tesla is positioned to start competitively.

Elon's comment of liability falling to Tesla when the Tesla Network launches is the end game, where liability is divided based on whether the human or computer is driving. There are numerous creative billing options possible, which (I can't believe I'm saying this about insurance) could be interesting.

I don't think traditional insurers will be able to keep up with (nor have the ability to track) the pace of change so, in hindsight, Tesla insurance seems not just obvious but mandatory.

 

[GreenT]

Lots of synergies. For me, it is a necessary feature of TN. TN drives most of Elon's decisions I believe:

TN?

 

[LN1_Casey]

I think it's a smart move for Tesla, since they are trying to push for their FSD already. Even if they don't get the regulations passed widely enough for a full market within the next few years, even the current AP 2.5 greatly reduces the at-fault driving from most drivers, thus being cheaper per mile to insure, even if the cars themselves are expensive.

And, removing the possibly biased cost of insurance for a safer vehicle (because people hate Tesla), makes their vehicles more appealing. I know if I'm paying $700-1.5k a month already for the vehicle, I don't ALSO want to pay $300-500 in insurance, making it a 2k/month purchase!

 

[ewoodrick]

TN?

I'll agree, folks posting acronyms only show their own shortcomings.

 

[Boomer19]

I'll agree, folks posting acronyms only show their own shortcomings.

Tesla Network

 

[stretchsje]

Another thought: Tesla is already determining human driver quality for their FSD training. They only want data from what are deemed good drivers. A similar or identical algorithm could be used to determine human driver risk and thus insurance rates.

 

[TheTalkingMule]

There are plenty of Telsa Insurance threads already, in appropriate areas of the discussion forum. You don't need to start a thread in the Investors Forum for every topic under the Sun.

 

[bhtooefr]

However, wouldn't be a bad place to talk about the impacts on the financials of the business as a result of the insurance. And we need to get things out of the main thread.

Which I will do now.

Very informative, love your posts in general. But I think people are only seeing one side of the equation. Tesla is concerned with 2 kinds of accidents, Tesla drivers fault and no fault. Also concerned with vandalism and theft (sentry mode).

Don't forget uninsured/underinsured claims (which pays out like a no fault, even though it's not actually no fault). However, it's possible that AP safety features may help reduce those, too, helping improve the profitability of the operation.

 

[jbih]

If people get the feedback that driving more careful will reduce their insurance premiums they will be more careful. Which will reduce the money Tesla Insurance has to pay them, further increasing profits.

 

[Buckminster]

Tesla (TSLA) Q3 2020 Earnings Call Transcript | The Motley Fool
Obviously, insurance is substantial. So insurance could very well be, I don't know, 30%, 40% of the value of the car business, frankly.

And as we've talked about before, with a much better feedback loop, instead of being statistical, it can be specific. And obviously, somebody does not have to choose our insurance. But I think a lot of people will. It's going to cost less and be better, so why wouldn't you?

 

[LN1_Casey]

If I had the option, I'd buy my insurance through Tesla. Unfortunately, not in CA.

 

[Boomer19]

elon said could be 30-40% of biz

i got excited. then i talked to my friend who is high level exec of an insurance company

insurance will be a series of hurdles. states vary. many don’t allow the model that tesla is likely pursuing.
they’ll have to prove that their data model is ‘better‘ (not sure if that’s the right word) in order for state reg’s to deviate from an entrenched industry model. it’s easy to say well they have better data than anyone but that modeling isn’t even currently allowed across all states.

all that red tape before finally targeting who? car owners who arent homeowners, or at least those that don’t bundle into umbrella policies. rarely will an umbrella provider let you have a side piece (i.e. separate policy with tesla)
but....that’s still a large audience (non-umbrellas).
at very least we have to consider the target audience is not every US tesla owner. anyway...this is a separate thread which should be started. i’d be happy to get more details off this friend over time but right now i think we can ignore insurance for the time being. it won’t be 100s of millions in rev for years. like 5 years.

no i’m saying that states don’t allow insurance companies to deviate from the entrenched method of applying insurance premiums to customers

(basically tesla’s going to say, our model works better due to the data we obtain, it’s more logistically sound, it’s rooted in data and facts not actuary tables...insurance regulations will say no, or prove it, or scream privacy, or...name it)

but before i get too far ahead of myself, i know zip about the topic.
only enough from my conversation yesterday that insurance won’t be a slam dunk - and it deserves a thread that can be developed and fine tuned over time

well, not a jordan slam dunk.
and sure as hell hopefully not a george tenet slam dunk
(sorry george, if you’re reading)

 

[Boomer19]

Insurance companies can create rating factors from any data points, subject to state regulations. Lack of available data points have prevented more specific premium rates in the past.

IMHO, and with no offense to your friend, that’s like talking to FORD about difficulties to ramp battery production or FSD. If you’re in an industry that’s being disrupted, it can be challenging to disengage from the ‘reality you live in’. If I’ve learned one thing around here it’s to never bet against Elon. Not suggesting that’s what you’re doing btw...just a statement of my reality.

this was a reinsurer. even insurers need insurance.
and i understand that point of view. that’s where i started as well. i’m just saying it’s a tough nut to crack. obv not the hardest thing they’ll achieve given time...
i’m only divulging that in the hopes of avoiding lots of commentary about the enormous prospects of teslasurance. it’s a ways off

 

[Boomer19]

Insurance has always been a late adopter of new ideas and technology - sort of the opposite of disruptive. It’s ripe for the picking, but there are many hurdles, especially around regulation.

 

[EVortex]

Thanks Boomer for posting these on the Insurance thread. I am very interested in what is possible through Tesla Insurance. I was a senior executive at two insurance companies during my career and partner of an insurance software company in the ‘80s and ‘90s that was very disruptive for the time - first configurable policy and claim administration system on PCs and LANs. Saved 90% on IT costs by converting from the mainframe. We eventually sold the company to IBM.

Tesla has the opportunity to disrupt insurance by leveraging their vast detailed data repository and realtime data and video. Imagine premiums specifically computed from hundreds of rating factors, less litigation on claims due to video evidence, and quick turnaround on repairs and claim payments. That’s just the beginning - so much is possible.

 

[Boomer19]

Thanks Boomer for posting these on the Insurance thread. I am very interested in what is possible through Tesla Insurance. I was a senior executive at two insurance companies during my career and partner of an insurance software company in the ‘80s and ‘90s that was very disruptive for the time - first configurable policy and claim administration system on PCs and LANs. Saved 90% on IT costs by converting from the mainframe. We eventually sold the company to IBM.

Tesla has the opportunity to disrupt insurance by leveraging their vast detailed data repository and realtime data and video. Imagine premiums specifically computed from hundreds of rating factors, less litigation on claims due to video evidence, and quick turnaround on repairs and claim payments. That’s just the beginning - so much is possible.

very cool. thanks!
will be interesting watching this develop.

 

[TespaceX]

Imagine premiums specifically computed from hundreds of rating factors, less litigation on claims due to video evidence, and quick turnaround on repairs and claim payments. That’s just the beginning - so much is possible.

I don’t get the lack of dash cams in the US. Is it another invasion of privacy matter with Americans?

Dashcams are pretty much standard in every car in Russia, China, Korea, and Taiwan. It makes determining fault so easy. I can only imagine insurance carriers should give big discounts (due to time saved in litigation, finding who is at fault) to drivers who have one installed and running.

 

[Buckminster]

I sold or hedged my position a while back. I've since reversed or bought back about half that position. TSLA is now about 20% of my portfolio.

Good things happening at the company have caused me to dramatically increase my estimate of fair value.

I don't read all the posts on the board anymore ... way too many. So if insurance has been explained then disregard these comments:

Some people thought that Elon misspoke when he said that insurance could be worth 30-40% (IIRC) of the car business. I don't think he did (if viewed from the cars alone and not including Robotaxi etc.). Tesla insurance will be very sticky. The data we have will give us a competitive advantage. We'll know exactly where you drive your car, who's driving it, how it's driven and where it's parked at night. Our pricing will be dead on and drive margins to normally unsustainable levels. The beauty of insurance is that it gets sold every year (by law) for the life of the car. Maybe thirty years for a car sold now. So, if we make a $50 profit - in today's dollars - for the next 30 years on the sale of a car, then we made $1,500 extra on the sale of that car. That's how you get to 30-40%.