If premiums are too low, insurance payoutswill bankrupt the company. If they’re too high, no one will buy yourinsurance. It’s a fine line, and the better your data,the more clarity you have around risk, and the more accurately you can price your insuranceproduct. The thing is, most actuaries have access tothe same data. It’s broad and general. Tesla, however, has a RIDICULOUS competitiveadvantage. The Data A Tesla truly is a smartphone on wheels. The on-board telemetry is out of control. Every time you plug in at home, your Teslais uploading a mountain of anonymous driving data to help improve Tesla’s self drivingAI, among other things. Data is so important in pricing insurancerisk that many insurance companies will provide customers a telematics device to install intheir vehicles which measures things like speed, acceleration and braking to determinehow “safe” you are as a driver, and thus to price your insurance accordingly.
Well, Tesla has more data than ANYONE else,by a stupid margin. While Tesla insurance doesn’t utilise thisdata yet, you can bet they will over time, and by doing so, will be able to either dropprices, increase margins or both. I really want to stress how important thisis. No other insurance company can know what Teslacan about the driving habits of a Tesla driver. No one can therefore price insurance as accuratelyand CHEAPLY as Tesla will be able to. It just won’t be possible to compete. Tesla knows when you brake, accelerate, howfast you do both, your reaction times, whether you’re ludicrous mode, whether you’relaunching at every set of lights, whether you’re following too close, whether you’restaying in your lane, how aggressively you turn your wheel, whether the air con is on,whether music is playing, whether you hands are on the wheel and with a suite of camerasand other sensors available; what’s going on around them and perhaps, if you give thempermission,
Tesla insurance may even know if your eyes were on the road. I won’t be surprised if in the future, Teslaallows customers to opt-in to “full insurance data”, giving Tesla more data in exchangefor an even more competitive insurance premium. So, one more time. Other insurers will have literally NO HOPEof competitively offering insurance for Tesla vehicles when Tesla themselves has a gargantuanand exclusive data advantage. There’s no getting around this. As Tesla Insurance expands throughout theUS, it’s hard to imagine more than a marginal number of Tesla owners insuring with anotherprovider. Even with bundled discounts, it will be incrediblyhard to price better than Tesla. Autopilot, Active Safety & Pricing Tesla currently produces the safest, secondsafest and third safest vehicle ever tested by NHTSA with the model S, 3 and X havingthe three lowest EVER probabilities of injury in an accident. That’s an important piece of the puzzle. But avoiding accidents is even better andthis is where truly Tesla shines. Its autopilot and active safety features aredemonstrably safer than human driving and the software continues to improve over timewith no end in sight.
The more data gathered by the fleet, the saferthese features become and the less accidents happen. This perpetual improvement will mean lesspayouts and more profits (or lower premiums). Tesla is so focused on safety that in October2018, they began voluntarily releasing safety data every quarter. The most recent update from 2019 reads: In the 4th quarter, we registered one accidentfor every 3.07 million miles driven in which drivers had Autopilot engaged. For those driving without Autopilot but withour active safety features, we registered one accident for every 2.10 million milesdriven. For those driving without Autopilot and withoutour active safety features, we registered one accident for every 1.6 million miles driven. By comparison, NHTSA’s most recent datashows that in the United States there is an automobile crash every 479,000 miles. We can see already, Tesla's are demonstrablyless likely to be in an accident than other vehicles even without software safety featuresenabled. And with Autopilot engaged, you’re 6 timesLESS LIKELY to be in an accident than in another vehicle. Tesla will continue to improve these features,resulting in less accidents per mile driven and ever-lower premiums over time.
