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This is a fascinating article - and Make sure you read the Editors Note BTW:
Tesla Competing With ‘GEICOs of the World’ to Lower Insurance Prices
While executives of Tesla said the car maker’s insurance business isn’t yet big enough to warrant separate financial disclosure of its results, Chief Executive Officer Elon Musk reiterated a benefit for Tesla owners: cheaper premiums.
Speaking on an earnings conference call Wednesday, Musk said that “just by Tesla operating insurance for our cars at a competitive rate, that makes the other car insurance companies offer better rates for Teslas.” In other words, Tesla being in the insurance business “has a bigger effect than you think” because it lowers the cost of insurance even for Tesla drivers who don’t buy insurance coverage from Tesla. That’s because “now the GEICOs of the world have to compete with Tesla and cannot charge outrageous insurance for Teslas,” Musk asserted.
“It has an amplified effect, [which is] very important,” he said.
Musk went on to reiterate a second benefit which he has also described on past earnings calls: the creation of “a good feedback loop into minimizing the cost of repair of Teslas” as Tesla handles insurance claims. “We obviously want to minimize the cost of repairing a Tesla if it’s in a collision” for the customer and for Tesla Insurance. “Previously, we didn’t actually have good insight into that because the other insurance companies would cover the cost. And actually, the costs in some cases were unreasonably high,” he said.
Related article: Tesla Insurance Turning ‘Nightmare’ Claims Experience Into ‘Dream’: Musk
Now, with insight into damages caused by small accidents, “we’ve actually adjusted the design of the car and made changes in the software of the car to minimize the cost of repair… We’re actually solving how to get somebody’s car repaired very quickly and efficiently and back in their hands,” he said, noting that most accidents are actually small—”like a broken fender or scratched side of the car”—but provide this valuable feedback to build upon.
The design improvements made from the feedback “actually apply then to all cars…It’s remarkable how small changes in design of the bumper and obviously improving the logistics of providing spare parts needed for collision repair have an enormous effect on the repair cost.”
“If you’re waiting for a part to get repaired and that part takes a month, now you’ve got a month of having to rent another car. It’s extremely expensive. And, of course, you’re missing the car that you love and the one you actually want to drive. So, this has actually a very significant effect on total cost of ownership and customer happiness,” he said, describing the second key benefit of Tesla being in the business of insurance.
(Editor’s Note: Separately, Reuters reported this week that a Reuters analysis shows that traditional insurers are likely to total low-mileage Teslas rather than paying for repairs.)
He added: “The best repair is no repair, avoid the accident entirely, which since every Tesla comes with the most advanced active safety in the world, whether or not you buy full self-driving, you still get the intelligence of full self-driving for active collision prevention.”
Read the rest of the article here
Tesla Competing With ‘GEICOs of the World’ to Lower Insurance Prices
While executives of Tesla said the car maker’s insurance business isn’t yet big enough to warrant separate financial disclosure of its results, Chief Executive Officer Elon Musk reiterated a benefit for Tesla owners: cheaper premiums.
Speaking on an earnings conference call Wednesday, Musk said that “just by Tesla operating insurance for our cars at a competitive rate, that makes the other car insurance companies offer better rates for Teslas.” In other words, Tesla being in the insurance business “has a bigger effect than you think” because it lowers the cost of insurance even for Tesla drivers who don’t buy insurance coverage from Tesla. That’s because “now the GEICOs of the world have to compete with Tesla and cannot charge outrageous insurance for Teslas,” Musk asserted.
“It has an amplified effect, [which is] very important,” he said.
Musk went on to reiterate a second benefit which he has also described on past earnings calls: the creation of “a good feedback loop into minimizing the cost of repair of Teslas” as Tesla handles insurance claims. “We obviously want to minimize the cost of repairing a Tesla if it’s in a collision” for the customer and for Tesla Insurance. “Previously, we didn’t actually have good insight into that because the other insurance companies would cover the cost. And actually, the costs in some cases were unreasonably high,” he said.
Related article: Tesla Insurance Turning ‘Nightmare’ Claims Experience Into ‘Dream’: Musk
Now, with insight into damages caused by small accidents, “we’ve actually adjusted the design of the car and made changes in the software of the car to minimize the cost of repair… We’re actually solving how to get somebody’s car repaired very quickly and efficiently and back in their hands,” he said, noting that most accidents are actually small—”like a broken fender or scratched side of the car”—but provide this valuable feedback to build upon.
The design improvements made from the feedback “actually apply then to all cars…It’s remarkable how small changes in design of the bumper and obviously improving the logistics of providing spare parts needed for collision repair have an enormous effect on the repair cost.”
“If you’re waiting for a part to get repaired and that part takes a month, now you’ve got a month of having to rent another car. It’s extremely expensive. And, of course, you’re missing the car that you love and the one you actually want to drive. So, this has actually a very significant effect on total cost of ownership and customer happiness,” he said, describing the second key benefit of Tesla being in the business of insurance.
(Editor’s Note: Separately, Reuters reported this week that a Reuters analysis shows that traditional insurers are likely to total low-mileage Teslas rather than paying for repairs.)
He added: “The best repair is no repair, avoid the accident entirely, which since every Tesla comes with the most advanced active safety in the world, whether or not you buy full self-driving, you still get the intelligence of full self-driving for active collision prevention.”
Read the rest of the article here
