Not necessarily. I'd pay more for car insurance to avoid being tracked this way, but that doesn't make me higher risk. Or maybe I just want to keep my home and auto insurance bundled so I can save money on both.

At the end of the day, if the existence of a Tesla insurance removes a portion (not all) of low risk drivers from the insurance market, the remaining drivers would be higher risk. The insurance company doesn't care about the mechanism that causes it, at the end of the day the collision rate will stabilize into a new higher rate, together with the associated insurance rate.

Can you even opt-out of being tracked by Tesla? Even if you're not buying their insurance, I'm sure their EULA will grant them access to your data.

It will be interesting to see how this develops. Will they begin selling this data? I imagine it's valuable for rental car agencies, ride-share apps, etc etc.

Selling access to the data in some fashion (think how Google, FB, etc allow advertisers to buy access to a certain user to shoaw ads) as a recurring business model is probably more profitable