Elon Musk’s Tesla plans to launch its own insurance product for Tesla drivers, which will be fronted by Markel Corp.’s subsidiary, State National. Markel’s Co-Chief Executive Officer Richard R. Whitt confirmed the partnership during the company’s first quarter earnings call on May 1.
“State National is a company that provides…the plumbing to move risk to capital,” said Whitt, answering a question from an investor.
Whitt noted that Markel was originally attracted to State National, which it purchased in 2017, because “they are quite honestly the best in the business in terms of offering that fronting model.”
State National aims to help people with innovative ideas navigate the regulatory environment and help them execute their ideas, Whitt explained during the conference call.
“That’s where State National can come to the table and help them,” he said, noting that State National is supporting Tesla’s innovative ideas with capacity from risk-taking partners.
“State National does not retain any business, their model is not to retain any of the business, and so this business is being ceded onto Tesla’s risk-taking partner,” he continued.
California Department of Insurance approved Tesla’s insurance product, fronted by State National, on April 9.
Musk has frequently complained that Tesla customers are charged higher insurance rates, despite the safety features embedded in Tesla vehicles, such as Autopilot, which helps avoid crashes. Tesla partnered with Liberty Mutual Insurance Co. in October 2017 to offer insurance called InsureMyTesla, but car owners are still complaining about high premiums. For example, a Twitter user in July 2018 complained to Musk that rates offered from InsureMyTesla are twice as high as competitors.
A Liberty Mutual representative was not immediately available to comment on the InsureMyTesla rates.
Musk has described Tesla’s new insurance product as “much more compelling than anything else out there,” which will reward good drivers with lower insurance premiums. Tesla often says its technology, including its Autopilot system, makes its vehicles safer, reducing crashes by 40 percent — which also could provide a reduction in auto premiums.
The Tesla safety claim has been challenged in several lawsuits, which blame fatal crashes on failures of the Autopilot system. In addition, a February 2019 study conducted by Quality Control Systems Corp. disputed findings from the National Highway Traffic Safety Administration’s in 2017, which concluded there was a 40 percent reduction in the rate of crashes by Tesla vehicles after they were equipped with automated driver-assist systems marketed as Autopilot.
Bedford, Tex.-based State National’s website describes its Program Services division as providing “A” rated paper in all 50 states through three admitted carriers: State National Insurance Company, National Specialty Insurance Company and City National Insurance Company, as well as two excess and surplus lines carriers, United Specialty Insurance Company and Independent Specialty Insurance Company.
- Tesla to Create Own Insurance Product, Says Musk
- Tesla Sued over Fatal Crash Allegedly Caused by Autopilot Malfunction
- Liberty Mutual Insurance Tailors Policy for Tesla Electric Car Drivers in U.S.
- Markel Finalizes Acquisition of State National Companies
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