Hacker News Reader

Comment by mhandley | Hacker News Reader

This could backfire on Tesla. If Tesla have better data than every other insurance company, then they'll be cheaper for low-risk drivers. But now other insurance companies know the only drivers that will not use Tesla insurance are high risk, so Teslas become harder to insure with all other insurance companies for a large fraction of drivers (and you don't know in advance if that's you), which in turn makes them less desirable to buy in the first place.

View on HN

> But now other insurance companies know the only drivers that will not use Tesla insurance are high risk

Not necessarily. I'd pay more for car insurance to avoid being tracked this way, but that doesn't make me higher risk. Or maybe I just want to keep my home and auto insurance bundled so I can save money on both.

The fact that there exist other reason to use a 3P insurance company doesn't really matter.

At the end of the day, if the existence of a Tesla insurance removes a portion (not all) of low risk drivers from the insurance market, the remaining drivers would be higher risk. The insurance company doesn't care about the mechanism that causes it, at the end of the day the collision rate will stabilize into a new higher rate, together with the associated insurance rate.

Insurance companies are already over pricing Tesla coverage, which is why Tesla is bothering to get into this market at all. The end effect here might just be the rate they are offering now becoming justified as Tesla plucks all the lower risk fruit away from them.

> I'd pay more for car insurance to avoid being tracked this way, but that doesn't make me higher risk.

Can you even opt-out of being tracked by Tesla? Even if you're not buying their insurance, I'm sure their EULA will grant them access to your data.

There's options to opt-out of various kinds of data-sharing in the car menu system.

Or maybe people will now have an incentive to drive more safely if they know it will save them money

This has always been the case, regardless of any Tesla involvement. This just makes the correlation between safe driving and lower cost a little less abstract.

It will be interesting to see how this develops. Will they begin selling this data? I imagine it's valuable for rental car agencies, ride-share apps, etc etc.

They probably won't sell it but i can imagine them licensing access to the real time data and then other insurers could potentially insure the driver or some similar scheme

Selling access to the data in some fashion (think how Google, FB, etc allow advertisers to buy access to a certain user to shoaw ads) as a recurring business model is probably more profitable

Luckily for Tesla, pretty much everyone rates themselves as a good driver, so they'll all be expecting to get the good low-risk rates.

Nah, I'm pretty aggressive and I know I should stick with dumb insurance.

Didn't think about this. Smart comment.

Yup, this is "adverse selection"

Reply on news.ycombinator.com