Tesla’s insurance program will use direct driver data where it can with permission, exec says

Tesla is only dipping its toes into the market with its new insurance program launched last month.

The head of Tesla’s insurance program said that the automaker plans to use direct driver data where it can with permission from the owners as it expands the program.

Last month, Tesla launched its own insurance program – starting with availability in California, where the automaker claims up to 30% cheaper premiums than the competition.

It’s Tesla’s second entry in the insurance industry after its InsureMyTesla program in partnership with third-party insurers.

The new program is directly brokered by Tesla through State National Insurance and the automaker is much more involved in the entire process.

They are building a full insurance division led by long-time Atlanta-based insurance executive Matt Edmonds.

He attended an auto insurance conference in Chicago yesterday and commented on what Tesla plans to do with its insurance program.

Tesla has access to more individual direct driver data than any automaker or insurance company thanks to its highly-connected vehicles.

Currently, the program doesn’t use individual data from drivers and instead, it uses “anonymized, aggregated data” from the fleet to create its prices.

Edmonds said that they plan to eventually use more direct individual data:

“The data is there, it’s all there, cameras in and all around your car, all of the data points are there. It really comes down to case law, and how much of the data we can utilize. It would have to be a state-by-state proposition,”

With the launch in California, Tesla is testing its system and it has run into issues.

We talked to owners who bought the insurance product for their Tesla vehicles and some of them reported having issues with customer services.

As for the prices, they have been hit or miss. Some are indeed seeing significant 20 to 30% discounts, but many owners are also receiving quotes higher than they are already paying.

Tesla is ironing out those issues before expanding it to more regions and introducing more advanced features based on more data from its fleet.

“Find the states where the population is, those will be the states we’ll be going to.”

CEO Elon Musk said that Tesla is going to focus on markets where they are seeing high prices to insure Tesla vehicles.

Using data from the Insurance Institute for Highway Safety, 24/7 Wall St. came up with a list of the 25 most expensive vehicles to insure based on insurance claim frequency and insurance cost per vehicle.

Tesla’s Model S topped it with an annual average insurance paid of $1,789.48 and annual collision insurance paid of $1310.40.

Last year, some insurance companies announced that they would increase their rates on Tesla’s vehicles based on a report that claimed “abnormally high claim frequencies” from Tesla owners.

Electrek’s Take

I am excited about Tesla’s new insurance division, but it’s going one of those things where you might not want to be an early adopter.

It’s a completely new business for Tesla. It’s built around data, which I think Tesla is really good at, and around customer service, which is hit or miss for Tesla.

That comes with the territory when you have a fast-growing company.

Long-term, I believe it’s going to be great for owners with the advent of more advanced driver-assist features and eventually, fully self-driving capability.

I am glad that Tesla is getting in early to have all those early issues ironed out before advanced driver-assist features and self-driving capability have a greater impact.