Elon Musk’s Tesla has begun bundling usage-based insurance with its electric vehicles in Asia. Although long expected, Tesla’s entrance into insurance has sent waves through the insurance industry as incumbents are now challenged to develop solutions to changing risk profiles, reduced accidents and reduced claims due to the rising use of autonomous vehicles. Similarly, in the UK, regulators have started asking insurers to provide products which will address both driver error and machine malfunction with a single policy.
As Tesla does not have an underwriting license, it is working with several insurers like AXA General Insurance in HK and QBE in Australia to build attractive insurance packages under the name ‘InsureMyTesla’. It has also rolled out a similar one in the US, with Liberty Mutual.
Jon McNeill, Tesla’s vice president of sales and services, has said of InsureMyTesla: “It takes into account not only the Autopilot safety features but also the maintenance cost of the car. It’s our vision in the future we could offer a single price for the car, maintenance, and insurance.”
Although the arrival of autonomous vehicles is a threat to auto insurer’s revenues, the fact that more and more digital platforms are offering their platforms as distribution mechanisms only bolsters the case for traditional insurers to find tailored products for the market.
Tesla’s CEO Elon Musk said: “If we find that the insurance providers are not matching the insurance proportionate to the risk of the car then if we need to we will in-source it.“
Tesla can also leverage its access to telematics data to help it monitor driver performance and vehicle usage. It can use this data to provide innovative insurance solutions and help to incentivise customers.
Tesla has been partnering with insurance providers in several key markets which has the potential to develop into digital ecosystems that could stretch beyond the automotive and insurance industries including, entertainment, news, education, accommodation, tourism and even fast-food services.