Tesla Just Made an Announcement That May Completely Change the Auto Industry

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.

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.

> "Starting today, we're launching Tesla Insurance, a competitively priced insurance offering designed to provide Tesla owners with up to 20 percent lower rates, and in some cases as much as 30 percent," Tesla announced on its website last week. According to the statement, Tesla Insurance offers comprehensive coverage and claims management to customers in California, with planned expansion to additional U.S. states in the future.

This made no sense until I read this:

> "Tesla Insurance does not use nor record vehicle data, such as GPS or vehicle camera footage, when pricing insurance," states the company.

Now the plan becomes clear. Create a profit center through an insurance division that's granted privileged access to the wealth of surveillance tech built into each Tesla but unavailable to outside insurers.

"Tesla Insurance does not use nor record vehicle data, such as GPS or vehicle camera footage, when pricing insurance,"

unless there are [hardware] guarantees, this may or may not be true at some later moment.

Biggest announcement Tesla could make is reporting an annual profit.

This is a very interesting move, especially so if Tesla does/will own the body shops doing any kind of collision work.

So what the title says is that it may or may not change the auto industry.