Tesla has hired a long-time GEICO executive to help lower the insurance costs for its electric vehicles.
For years, Tesla has tried to deploy its own and partnered insurance products in order to address the generally high insurance costs that its owners have to pay.
The automaker has managed to reduce the cost of its vehicles over the last 5 years, but other costs related to owning its vehicles, like interest payments and insurance, have remained high.
Tesla believes that reducing those costs would help increase demand.
At first, Tesla deployed products in partnership with established insurance companies.
In 2019, the automaker introduced its own insurance product in California, but it didn’t utilize real-time driving data or Tesla’s safety score, which had been the original goal.
Before expanding its insurance product to other markets, Tesla wanted to build up its safety score system, which utilizes driving data collected in real time from Tesla vehicles to determine if you are a “good driver” based on things like the number of “Forward Collision Warnings” you get, the amount of hard braking you do, aggressive turning, unsafe following distance, and if you get forced Autopilot disengagements.
In October 2021, Tesla finally launched its new insurance product based on the safety score in Texas, and it has been expanding it to many states since.
However, the product has been controversial. The limitation of the pricing being based on the real-time data, in contrast with the performance of Tesla’s vehicles, which are fun to play with, makes it a product not ideal for everyone.
Now, Electrek learned that Tesla recently hired Allen Laben, a 20-year veteran of insurance giant GEICO.
Top comment by Swallow_Doretti
Teslas are expensive to insure because the cars are hard to repair after a collision, which is a downside of things like gigantic single-stamping mega-castings that reduce initial costs. Reducing collision repair costs is something that's baked in from early in design; at Ford, for example, we had engineering teams that ran alongside the main design teams focused on ensuring vehicles were easily repairable, even by third-party shops, to help keep insurance costs reasonable. There's a very delicate balance, because making things more repairable also adds assembly cost and weight.
Most recently, Laben was ‘Director of Claims Specialty Operations’ at GEICO, but he held several executive and managerial roles at the company over this career.
The insurance exec recently confirmed that he joined Tesla in the role of ‘Head of Insurance Partnerships’.
He described his role on LinkedIn:
My goal is to make Tesla vehicles easy and economical to insure. By partnering with insurance companies, teams across Tesla, and collision shops in the USA and Canada, we’ll lower the total cost of Tesla ownership and accelerate the world’s transition to sustainable energy.
It sounds like Tesla is going to still rely on other insurance companies for the foreseeable future rather than rely entirely on its own insurance products.
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