Tesla’s insurance arm is taking a beating by paying out more than it earns from premiums, according to data from S&P Global.
This is significantly higher than the national average loss ratios calculated for other insurance companies.
In 2019, Tesla set out to lower insurance rates for owners of its electric cars. The goal was simple, at least in theory: fix the broken cost of car insurance. Instead, Tesla may have broken its own calculator trying to make sense of repair costs.
Perhaps the low premiums purpose was to drive more EV sales?
But Tesla insurance may point out FSD in not all that much?
Musk’s vision of Tesla’s insurance product was that traditional companies just didn’t “get it.” Tesla’s data claims that its Full Self-Driving software has fewer accidents than a human driver. Plus, its cars are rolling computers that can collect copious amounts of data on its drivers and adjust risk based on their driving. So why wouldn’t drivers get a lower rate for putting around with FSD enabled if they also happen to be a safe driver? Tesla quickly found out that despite these assumptions, it’s still taking a bath on claim-related losses.
California (*to use an example where Tesla has significant share) is not a no-fault state, therefore if the other driver does a wham-bam, Tesla Insurance can recover the cost of repairing the Tesla thru subrogation. Given that Teslas have video of the incident, “fault” or “not fault” should be pretty simple to prove.
Anyway, the article makes no mention of whether the damage claims are as a result of FSD, not-FSD, or completely unattended accidents - and I would hazard a guess that at least part of it is because they are so bloody expansive to repair (for a variety of reasons.)
I hope Tesla’s AI driving works better than its AI insurance premium setting.
Only if the other car has coverage! Here in South Florida, 20-30% of cars on the road lack insurance coverage. Every DMV has an insurance agency next door, and they all have “monthly payment plans” so you get your insurance policy (the number on it is required to register your car), pay for the first month, go next door and register your car, and then stop paying for the insurance for the next 11 months. California is similar.
They change the premiums every month based on your driving score (I described that in a post earlier today). It is quite possible that Tesla has no interest in making money from selling insurance, so they simply set the price of insurance at break even.
