Just like Big Tech companies are venturing into insurance, so are many other companies including, but not limited to, Tesla. The use of technology in the insurance space (in other words, insurtech) has allowed these non-traditional players to position themselves in the market and compete with well-known insurance companies. In this Pacific Prime article, we’ll take a closer look at what Tesla’s car insurance offers as the company is on a mission to improve road safety, reduce the cost of insurance, and, of course, enhance the customer experience.
The power of insurtech
Before we launch into what Tesla Insurance is up to, let’s first refresh our memory on what insurtech is and why it’s so powerful. As a portmanteau of ‘insurance’ and ‘technology’, insurtech refers to technological innovations that are created and implemented to improve the efficiency of the insurance industry. Whether it’s the use of Big Data to better assess risk in the underwriting process or Artificial Intelligence (AI) to automate the claims process, there are a number of ways technology can be used for the better.
Tesla’s car insurance uses real-time driving behavior
Currently, Tesla’s insurance is available in a handful of states in the US. By the end of 2022, the company expects to be the largest insurer of Teslas in the state of Texas and also aims to give 80% of US customers access to a Tesla insurance product. After which, the company will focus their attention on expanding in the rest of the world. The main driver behind Tesla’s insurance is that it uses real-time driving behavior.
Here’s how it works:
Essentially, a Tesla Safety Score (or score that captures the insured driving safety by monitoring forward-collision warnings every 1,000 miles, braking abrupt, aggressive turns, dangerous follow-up times, and inattention while using Tesla’s advanced Autopilot driver assistance system) is given to an insured driver. In addition, drivers also get real-time insights into their driving behaviors at the end of each trip and their safety scores will be updated.
A 30-day mile-weighted average of daily Tesla Safety Scores is calculated in order to determine a driver’s likelihood of being involved in car accidents and the figure is, thereby, used to determine their car insurance premiums. Other factors included in the Tesla Insurance premium calculation are vehicle model, policyholder address, miles driven, and coverage selected, amongst others.
Benefits of Tesla’s car insurance
As Elon Musk, the famous CEO of Tesla Motors, said in an Insurtech Insights article, Tesla is “trying to turn a nightmare into a dream with Tesla Insurance”. This is a reference to how the claims process can usually be very bureaucratic and frustrating, requiring the insured to argue with insurance companies and collision repair centers, and how Tesla aims to enhance the customer experience by fixing any repairs without any discussion taking place. What’s more, Tesla Insurance also brings two fundamental benefits with regards to:
Improves road safety
Providing drivers with real-time feedback on their driving habits enables them to be more aware of their driving and prompts them to adjust their driving behavior (in order to save money on their insurance premiums). This in turn leads them to drive safer and improves overall road safety.
Reduces the cost of insurance
As alluded to previously, encouraging good driving behaviors reduces the likelihood of car accidents on the road, which means the cost of repairs is also lower. This lowers the cost of insurance for customers. In fact, many customers have also noted that they have saved money by switching to Tesla Insurance.
Pacific Prime can help you find insurance plans from insurtechs
Insurtech is all the rage and it’s hardly a surprise. If you too would like to secure insurance from an insurtech, you’ve come to the right place. As a global health insurance brokerage, with over two decades of experience in the insurance sector, Pacific Prime works with a number of insurtechs and technology-driven insurance companies, and has knowledgeable and impartial insurance advisors on hand who can help you find the best insurance solutions for your needs and budget.
Contact us to get started today!