Re:Tesla Just Made an Announcement That May Completely Chang...
by smt88 on Tuesday September 03, 2019 @03:49PM
(#20870444)
This is a mostly fluffy, speculation-heavy piece without much insight and certainly without any knowledge or understanding of auto insurance.
Here are some corrections:
- Tesla isn't the first auto manufacturer to offer their own insurance. Porsche does this already[1]. Perhaps others do as well.
- Tesla isn't using its vast array of driving data to rate policies because it legally can't. Auto insurance companies must have their underwriting methodology approved by each state government. Some states limit what you can use. In at least one state, you can't use much more than the number of miles driven per year.
- There's nothing groundbreaking about the idea of providing good customer service as an insurance company. Bad customer service can be cheaper, so companies like Geico actually offer bad customer service as a strategy. When an industry is as heavily regulated as (auto) insurance is, your major levers are all cost-related. Some companies (like Progressive and Allstate) try to retain high-quality, low-cost[2] customers, while other companies (like Geico) just take low-quality customers, deny their claims, and ride the churn.
2. Incidentally, this has created an opportunity for new insurance companies to undercut the old guard by offering better value for the large number of drivers who never get into accidents.
Here are some corrections:
- Tesla isn't the first auto manufacturer to offer their own insurance. Porsche does this already[1]. Perhaps others do as well.
- Tesla isn't using its vast array of driving data to rate policies because it legally can't. Auto insurance companies must have their underwriting methodology approved by each state government. Some states limit what you can use. In at least one state, you can't use much more than the number of miles driven per year.
- There's nothing groundbreaking about the idea of providing good customer service as an insurance company. Bad customer service can be cheaper, so companies like Geico actually offer bad customer service as a strategy. When an industry is as heavily regulated as (auto) insurance is, your major levers are all cost-related. Some companies (like Progressive and Allstate) try to retain high-quality, low-cost[2] customers, while other companies (like Geico) just take low-quality customers, deny their claims, and ride the churn.
1. https://www.porscheautoinsurance.com
2. Incidentally, this has created an opportunity for new insurance companies to undercut the old guard by offering better value for the large number of drivers who never get into accidents.