Comment by kjksf
16 hours ago
Tesla is cooperating with Lemonade on this by providing them necessary user driving data.
If Tesla didn't want Lemonade to provide this, they could block them.
Strategically, Tesla doesn't want to be an insurer. They started the insurance product years ago, before Lemonade also offered this, to make FSD more attractive to buyers.
But the expansion stalled, maybe because the state bureaucracy or maybe because Tesla shifted priority to other things.
In conclusion: Tesla is happy that Lemonade offers this. It makes Tesla cars more attractive to buyers without Tesla doing the work of starting an insurance company in every state.
> But the expansion stalled, maybe because the state bureaucracy or maybe because Tesla shifted priority to other things.
If the math was mathing, it would be malpractice not to expand it. I'm betting that their scheme simply wasn't workable, given the extremely high costs of claims (Tesla repairs aren't cheap) relative to the low rates that they were collecting on premiums. The cheap premiums are probably a form of market dumping to get people to buy their FSD product, the sales of which boosts their share price.
It was not workable. They have a loss ratio of >100% [1], as in they paid out more in claims than received in premiums before even accounting for literally any other costs. Industry average is ~60-80% to stay profitable when including other costs.
They released the Tesla Insurance product because their cars were excessively expensive to insure, increasing ownership costs, which was impacting sales. By releasing the unprofitable Tesla Insurance product, they could subsidize ownership costs making the cars more attractive to buy right now which pumped revenues immediately in return for a "accidental" write-down in the future.
[1] https://peakd.com/tesla/@newageinv/teslas-push-into-insuranc...
Who was paying for this?
4 replies →
The math should've mathed. Better data === lower losses right? They probably weren't able to get it to work quite right on the tech side and were eating fat losses during an already bad time in the market.
It'll come back.
Lemonade or Tesla if you find this, let's pilot, i'm a founder in sunnyvale, insurtech vertical at pnp