Perhaps it's because you need data to arrive at the correct pricing and if you price too high, you won't get that data. It may make sense to lose a little bit initially during the data gathering stage to more quickly arrive at an accurate pricing model than to overestimate and allow your competition to gather all the data.

Internal pressure probably. Not all insurance products are profitable. Especially big insurers are willing to take a hit to get in "good" customers, for example rich Tesla drivers. Then cross sell other products and raise the price of the original insurance yearly.

Why would a rich tesla driver be a better customer? What if they make a bunch of claims? Insurance is about having predictable data. In this case it looks like Tesla drivers are making too many claims so they need to make premiums higher.

I can answer that. I am not rich, and when the company that insured my car raised it rates a lot I went looking elsewhere.

The new company got my car insurance, and when my truck insurance was due they got that too. Later that year I added my house insurance and since I was getting discounts I also added my cabin up at Parry Sound.

So the result of having a cheaper car insurance is they sold me four policy not just one.

While not rich and not a tesla driver. I'd speculate richer folks tend to not micromanage prices changes(raises) in insurance premiums. Someone who is less rich might reconsider insurance purely on a financial decision. And someone a little more wealthy will never look twice at it.

Most people don't get in accidents and most people need auto insurance for many decades. So those lazy rich people will likely not change.

This is also assuming most people don't make many claims in insurance. (as is the base concept of how insurance works?)

Yeah, I don't usually cross shop renewals. I just renew whatever I have, unless the premium increase is considerable (+15-20%).

I might be leaving a lot of money on the table, and I'm not even that wealthy, but it's just not worth it to me.

And I'd add that the few times I've made relatively minor claims on both my home and auto insurance (handled by the same company), it's been pretty much completely painless. It's just not worth it for me to go to a bargain basement insurer to save maybe a few hundred bucks a year.

Richer insurees have more assets to go after if they are involved in a the 2-sigma events (eg killed someone while drunk driving; insurance can come after a wealthy person's assets).

It wouldn't be shocking that tesla drivers are expected to make fewer claims, based on the halo bias towards wealthy people.

But if you are the insurance of the Tesla driver, it's the other party (through insurance or directly) that will come after your driver, not you. You will just say to your driver "per our contract, I cover up to $X, and the rest, you will have to deal on your own". You're not responsible for getting that money out of him, if I'm not mistaken.

I can only guess - after you cross 25 years of age, I have never heard of insurance going down. I know people who are 50-60 years old, with zero claims ever, and they never get a discount, the annual renewal always come back higher. So what they do? They move every year. Every single year, they go through the effort of calling few insurers to get marginally better price to avoid the inevitable hike.

I can only guess that if you are rich then you don't care - it's more likely you will stay with the same insurer because it's not worth your time to be looking elsewhere.

More likely to purchase other profitable lines. Sell them an inexpensive auto insurance policy, then make more money on Homeowners, Liability, Umbrella, Boat, Jewelery, Life, etc.

This is the answer. Homeowner's is the big profit maker for those companies which sell both. Presumably a Tesla owner has an expensive home. Auto is just for breaking even.

It's probably not that difficult to create a model that will adjust the prices to reclaim the loss later. Starting low likely generates more sales overall.