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October 27, 2017

Tesla seeks to reduce insurance premiums

By GlobalData Financial

The majority of industries are being revolutionized by the continuous advances in technology – and the private motor insurance industry is no exception, according to GlobalData Financial Services

The vehicle manufacturing industry is facing one of the most significant technological changes in its history.

Tesla, a US automotive and energy storage company, is perceived as being at the forefront of these changes, developing and implementing new technologies in equal measure. One of the most revolutionary of these technologies is Tesla’s autopilot feature.

Through the use of ultrasonic sensors and cameras which provide a 360-degree view of the car’s surroundings, Tesla vehicles are able to match the speed of the surrounding traffic conditions, keep within a lane, change lanes automatically, exit a motorway when required, and even park themselves – all without the need for input from the driver.

Clearly the exponential advances in this technology have made driving much safer, as the potential for driver error is removed from the situation once the Tesla is in autopilot.

Crash rates across all Tesla models have fallen by 40% since the introduction of the autopilot system, illustrating how this technology has significantly improved the safety of driving. However, when owners seek to insure their Tesla vehicles, this is not reflected in the pricing of premiums.

Tesla has responded to this, and is currently partnering with insurers across 20 countries through a scheme known as Insure My Tesla. The aim is to provide Tesla owners with an insurance premium that accounts for the significant advances in the safety of these vehicles.

In the UK, Tesla is collaborating with Direct Line to provide information on the capabilities of each model, something which other insurers struggle to quantify.

With the automotive industry continually seeking to implement the latest technology, autopilot systems similar to those within Tesla models are likely to become the norm across all car manufacturers.

The result will likely see UK roads become safer and accident rates decrease, as there is a cultural shift towards using this technology.

With over 2,500 Tesla vehicles with autopilot capabilities currently on UK roads, and Tesla looking to launch its latest model aimed at the mass market towards the end of 2017, the need for insurance policies that reflect their higher safety standards will grow over the coming years.

Naturally the insurance industry will gradually respond to these developments, but the current pace of acknowledging the safety improvements such technology is bringing is far too slow.

The industry should seek to collaborate with vehicle manufacturers in order to better understand the latest technology and how it can improve driver safety – in turn this will allow for customers to receive lower insurance premiums.

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