I don’t think Tesla launching an MGA is necessarily a bad idea. It fits in well with the whole “new way to buy a car” thing they have going. If you can order the car online, why shouldn’t you also be able to insure it right then and there on the website? It makes sense from a marketing perspective.
However, Elon’s claims that Tesla vehicles are safe, and thus, should have lower premiums is flawed. Almost all luxury vehicles in this price range have advanced frequency reducing safety features such as lane monitoring, collision detection, etc. Think about an $80k Volvo for example. The difference is, when the Volvo does get in an accident, there are many more shops that can work on a Volvo as opposed to a Tesla. Parts are probably more readily available as well. So really, Tesla cars being more expensive to insure makes sense.
I could be wrong, but I think theft is usually a pretty low component of your comp EV. Most of the comp premium, depending on where you live, is probably going to go to the cat exposure. And also comp is typically cheap coverage anyways so you probably wouldn’t notice dramatic overall price differences based on lower theft frequency.
Ask any actuary you know to point to the component loss costs in the Comp loss cost and you’ll be enlightened as to why redlining was done in distant past underwriting.
Cat loss costs in comp are significant after a cat; i.e. the cat claims. But cat frequencies are very low, reducing the cat pure premium significantly relative to theft claims.
People already can and do insure their new cars right then and there – that’s the partnership with Liberty Mutual that is InsureMyTesla. The problem from Tesla’s point of view, they’re like most people who don’t get what actuaries do when pricing insurance. They just look at the facts of claims experience, where they have the facts – and where they don’t, they assume pretty bad things.
Tesla will just be the latest insurance outsider to think “hey that insurance thing isn’t so hard – collect premiums and pay claims when they come in, I can do that!” Developing an auto policy product is just a wee bit more complicated than that.
hmmmm…the band or the car company? I wonder if Elon is a fan of the band? I’ll bet he is, that’s why he named his car company “Tesla.” Their “Five Man Acoustical Jam” album is pretty solid.
whatever, it’s Friday. Hope everyone has a great weekend.
Sounds like a great deal for Tesla owners as Musk is wonderful at selling products for less than the true cost to produce. I wonder the legal/regulatory hurdles they face to only insure one brand of car with a publically availible product… I’m sure a month is plenty of time to figure it out.
They should change the name of the company to Edison. Historically he was more like Musk; part carnival barker, part snake oil salesman, and part brillant industrialist.
I guess Musk can see the writing on the walls: he is about to be crushed by electric car competition from nearly every major car company. Mercedes. Ford. BMW. They are all coming after electric cars now.
He may as well shift to insurance. The car business isn’t in his future. He reported a loss for the first quarter, federal subsidies for Teslas are going down, and the reality is that hybrids are just so much more practical.
“Brilliant”. Well, I think the jury is out on that. A guy who takes chances? Well that’s for sure.
Those comp premiums will be rising after the car batteries catch on fire. Fire Depts have a hard time putting those out and it is a total loss about every time.
“and then if they want to buy a Tesla insurance, they would have to agree to not drive the car in a crazy way. Or they can, but then their insurance rates are higher.”
This would be an interesting clause in a policy.
And what constitutes “not driving in a crazy way”? His opinion might differ from mine or yours or whomever else………does 1 MPH over the limit constitute crazy?? What about driving in a rain or snow storm?? This could be interesting……
I think the whole thing is laughable. I think the proof is in the pudding…they’ve already seen how premiums with Liberty (for the Tesla program) were higher, and it is extremely likely that Musk’s insurance product will fairly similar in cost – unless Elon chooses to pay a portion of every one of his insureds premiums.
Too many people think that their own premiums are way too high! Admittedly, I do it too.. but I because I understand the reality of how insurance works. It’s funny, I can only imagine the painful actuary meetings.
Good idea, Mr. Musk. Just not as simple and lucrative as you may think.
I am amazed at how much anger seems to be stored for Mr. Musk. the sea change that will happen with autonomous vehicles has been seen as an advantage to insurance companies. Musk is simply the first of likely autonomous auto builders to enter the real world of this technology and it will be disruptive, insurance companies can easily calculate premiums if the asked Tesla for miles drive vs known accidents or injury, I think high rates are due to a lack of data.
I don’t think Tesla launching an MGA is necessarily a bad idea. It fits in well with the whole “new way to buy a car” thing they have going. If you can order the car online, why shouldn’t you also be able to insure it right then and there on the website? It makes sense from a marketing perspective.
However, Elon’s claims that Tesla vehicles are safe, and thus, should have lower premiums is flawed. Almost all luxury vehicles in this price range have advanced frequency reducing safety features such as lane monitoring, collision detection, etc. Think about an $80k Volvo for example. The difference is, when the Volvo does get in an accident, there are many more shops that can work on a Volvo as opposed to a Tesla. Parts are probably more readily available as well. So really, Tesla cars being more expensive to insure makes sense.
No one would steal one, so the Comp premium would be lower than all/ most other similar valued cars.
By the way, what do you get when you re-arrange the letters in ‘Tesla’?
Do you mean “steal”? Or “least”? “Stale”?
Tales
I could be wrong, but I think theft is usually a pretty low component of your comp EV. Most of the comp premium, depending on where you live, is probably going to go to the cat exposure. And also comp is typically cheap coverage anyways so you probably wouldn’t notice dramatic overall price differences based on lower theft frequency.
Ask any actuary you know to point to the component loss costs in the Comp loss cost and you’ll be enlightened as to why redlining was done in distant past underwriting.
Cat loss costs in comp are significant after a cat; i.e. the cat claims. But cat frequencies are very low, reducing the cat pure premium significantly relative to theft claims.
People already can and do insure their new cars right then and there – that’s the partnership with Liberty Mutual that is InsureMyTesla. The problem from Tesla’s point of view, they’re like most people who don’t get what actuaries do when pricing insurance. They just look at the facts of claims experience, where they have the facts – and where they don’t, they assume pretty bad things.
Tesla will just be the latest insurance outsider to think “hey that insurance thing isn’t so hard – collect premiums and pay claims when they come in, I can do that!” Developing an auto policy product is just a wee bit more complicated than that.
hmmmm…the band or the car company? I wonder if Elon is a fan of the band? I’ll bet he is, that’s why he named his car company “Tesla.” Their “Five Man Acoustical Jam” album is pretty solid.
whatever, it’s Friday. Hope everyone has a great weekend.
Sounds like a great deal for Tesla owners as Musk is wonderful at selling products for less than the true cost to produce. I wonder the legal/regulatory hurdles they face to only insure one brand of car with a publically availible product… I’m sure a month is plenty of time to figure it out.
They should change the name of the company to Edison. Historically he was more like Musk; part carnival barker, part snake oil salesman, and part brillant industrialist.
I guess Musk can see the writing on the walls: he is about to be crushed by electric car competition from nearly every major car company. Mercedes. Ford. BMW. They are all coming after electric cars now.
He may as well shift to insurance. The car business isn’t in his future. He reported a loss for the first quarter, federal subsidies for Teslas are going down, and the reality is that hybrids are just so much more practical.
“Brilliant”. Well, I think the jury is out on that. A guy who takes chances? Well that’s for sure.
Those comp premiums will be rising after the car batteries catch on fire. Fire Depts have a hard time putting those out and it is a total loss about every time.
Tesla = Massive failure.
Another diversion tactic from Musk. Wait …. Wait ….. don’t look behind that curtain, look over here.
“and then if they want to buy a Tesla insurance, they would have to agree to not drive the car in a crazy way. Or they can, but then their insurance rates are higher.”
This would be an interesting clause in a policy.
Exactly. Maybe they want to remove the feature called “Insane Mode” if they are going to try to get people to agree not to drive crazy.
And what constitutes “not driving in a crazy way”? His opinion might differ from mine or yours or whomever else………does 1 MPH over the limit constitute crazy?? What about driving in a rain or snow storm?? This could be interesting……
claims could be a problem; but I suppose the underwriter has this covered. Caveat emptor though!
I think the whole thing is laughable. I think the proof is in the pudding…they’ve already seen how premiums with Liberty (for the Tesla program) were higher, and it is extremely likely that Musk’s insurance product will fairly similar in cost – unless Elon chooses to pay a portion of every one of his insureds premiums.
Too many people think that their own premiums are way too high! Admittedly, I do it too.. but I because I understand the reality of how insurance works. It’s funny, I can only imagine the painful actuary meetings.
Good idea, Mr. Musk. Just not as simple and lucrative as you may think.
I am amazed at how much anger seems to be stored for Mr. Musk. the sea change that will happen with autonomous vehicles has been seen as an advantage to insurance companies. Musk is simply the first of likely autonomous auto builders to enter the real world of this technology and it will be disruptive, insurance companies can easily calculate premiums if the asked Tesla for miles drive vs known accidents or injury, I think high rates are due to a lack of data.