Tesla started to offer its auto insurance in California since 2019 and its plan to expand to Texas, Illinois and Washington has already been taken place.
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In 2020, Ford began to sell pay-per-mile auto insurance (as known as Usage-Based Insurance, UBI) through a partnership with insurtech Metromile. In the same year, General Motor launched its OnStar Insurance Agency to offer auto insurance that rewards safe drivers.
And recently, startup automaker Rivian also confirmed to partner with Nationwide to offer UBI to its customers.
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With automakers selling insurance to car taiwan phone number buyers, what does it mean to the insurance industry? How will it change the way auto insurance is distributed? How to stay competitive if you work for an auto insurer?
Why are automakers entering the insurance market?
Let’s examine a few reasons why automakers are offering insurance to their customers:
Telematics made data more accessible
Thanks to the development and popularization of telematics.
This technology inside a car can track how much you drive, how fast you accelerate, how hard you brake, or how good you make your turns. Usage-based insurance (UBI) calculates the rate based on their driving behavior and rewards safe drivers with lower premiums.
With connected vehicles or through a mobile phone, more data available for determining the premium based on how people drive.
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Now carmakers can have access to the data created by these devices. This will allow them to understand their clients in a new dimension. With data generated from driving habits and behavior, they can have more insights for developing new products, more personalized pricing models, or real-time service delivery.
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The UBI market will continue to grow rapidly
According to Acumen Research and Consulting, the global usage-based insurance (UBI) market is expected to grow at CAGR around 29% and reach around US$190 billion by 2026.
Automakers can pivot their relationship with their existing customers by including auto insurance into the package as well as their balance sheets.
A better customer experience
By offering insurance directly from the manufacturer, it will create a more direct, in return a better customer experience for the consumers.
For example, every Rivian vehicle is Philippines phone number equipped with the company’s Driver+ suite of safety technology. Rivian Insurance customers will automatically receive a Driver+ rate reduction, in addition to any discounts for using the feature that automatically steers and adjusts speed on the highway. (Source)
Lower Premium Rates
Electric vehicle customers, mostly Tesla’s, have often complained about getting high rates on their auto insurance.
As a marketing tool, Tesla Insurance claimed that their premiums are 20% to 30% lower than rivals. But it will only be available to selected customers.
It may be that Tesla chooses the less risky cases and sends more complex ones to insurers with more experience and appetite to handle them. Or they might be taking a cut on the insurance revenue to keep the customer with the brand.
Is it a competition for traditional carriers?
The answer is yes and no, depending on who underwrites the policies.
If a carmaker sets up a new entity to offer auto insurance – with more attractive rates, it will be a healthy competition, and that’s beneficial to customers.
That’s what exactly Tesla is doing with Tesla Insurance and General Motors with their subsidiary OnStar Insurance Agency.
