I keep seeing people talking about Tesla Insurance (not picking on you DurandalAl - just a starting point), as if it's a serious business for Tesla -- either now or in the reasonably near future.
Can anybody point me to anything that suggests that Tesla Insurance is viewed as a serious business for Tesla, either now or in the future?
My understanding is that today it isn only available in California. My belief is that this will never be a serious business for Tesla - that biggest outcome intended would be Tesla acting in the role of a referral and bundler of a large number of new customers to an existing auto insurance company (i.e. - negotiating a special rate for "Tesla" insurance through State Farm, and then referring Tesla buyers to the "Tesla Insurance operated by State Farm" insurance policy).
I DO see this idea as something of a threat or nudge / motivation to the current auto insurance industry - start taking the improved safety and lower overall claims levels from Tesla vehicles into your premiums, or we'll just start up a competitor (or work with one of your competitors that IS doing this) and take your Tesla auto insurance premiums away from you.
In the meantime, the barriers to entry for Tesla as an insurance provider are very high. State by state licensing. Reserves so that Tesla can pay claims when needed. Building up a new division with the insurance business processes and expertise. It's this last point I see as a particularly large barrier - the Tesla insurance legal entity is going to need a fair bit of cash to get started, and will need to retain some reasonably large amount of reserve to be certain of being able to pay claims. Stuff that insurance companies do routinely and do well.
I imagine there are others here with a lot more insurance industry experience than me (who has ~none) and can articulate these barriers to entry better.
In the end, I see Tesla insurance as a money loser or break even for Tesla outside of a situation in which none of the current auto insurance providers see lower claims insuring Teslas and thus Tesla decides to go into competition by charging lower insurance premiums to insure Teslas.
Also worth adding, again MHO, is that it isn't completely clear to me that Teslas actually ARE cheaper to insure. Factors in favor of cheaper are fewer accidents, and reduced medical bills for the people in the Tesla when it does get in an accident.
Factors in favor of more expensive are that Teslas are totaled more frequently (I believe - don't have data to back this) and that seemingly minor damage leads to much larger repair bills (again - my belief, not data). Also that Teslas are more expensive on average than other cars on the road.
I think that the balance of those factors, mostly because of the medical bill side, DOES make Teslas cheaper to insure. Is it enough cheaper though for a standalone insurance business to flourish and generate significant profits though? I am firmly of the opinion that this is no, at least today and the foreseeable future. Get 10M Teslas on the road in the US - maybe then.
(and in the meantime, Tesla referring customers to a particular provider with typically good deals on auto insurance for Teslas - totally)
I would imagine also that any car that has the kind of insame performance numbers of a Tesla will cause insurance rates to rise above those for other similar, but sub-performing cars.
