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Comment by sabareesh | Hacker News Reader

Tesla have their own Insurance product which is already very competitive compared to other providers. Not sure if lemonade can beat them . Tesla's insurance product has similar objective in place already where it rewards self driving over manual driving.

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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?

You as the consumer when you buy a tesla car that's twice the price of what you can get it for in Asia. Teslas are very cheap to produce.

Remember with their own insurance they also have access to the parts at cost.

That is not true. Since Tesla was losing money on their insurance to boost sales the customers were not paying for it since they were receiving a service for below cost.

The people paying were actually the retirement funds who fronted Tesla's cash reserves when they purchased Tesla stock and the US government paying for it in the form of more tax credits on sales that would not have otherwise materialized without this financial fraud. But do not worry, retirement funds and the US government may have lost, but it boosted Tesla sales and stock valuation so that Elon Musk could reach his KPIs to get his multiple tens of billions of dollars of payout.

Wow this went deep ahaha

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

You'd be very surprised. Distribution works wonders. You could have a large carrier taking over Tesla's own vehicles in markets they care about. The difference then would be loss ratios on the data collection, like does LIDAR data really beat Progressive Snapshot?

The two are measuring data for different sources of losses for carriers.

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