Tesla Insurance Could Pose Long-Term Threat to U.S. Auto Insurance Industry, Says Morgan Stanley

Tesla Insurance could pose a long-term threat to the U.S. auto insurance industry, says Morgan Stanley. “We’re trying to turn a nightmare into a dream with Tesla Insurance,” says Elon Musk.

Analysts at Morgan Stanley said Tesla Insurance could pose a threat to the U.S. auto insurance industry in the long run. This may come as the company expands its new insurance product that uses real-time driving data. At the same time, they noted that Tesla's product does not pose a threat to the industry in the short term.

According to analysts, successful long-term market penetration depends on the complexity of the pricing and distribution strategy. However, it is worth considering that Tesla will undoubtedly have the best data on their cars. The real-time feedback loop on driving behavior that is contained in the insurance offering can lead to safer driving, which can lead to lower insurance premiums and higher acceptance rates.

“We will monitor TSLA’s underwriting results closely as it gains more traction,” the analysts said.

Meanwhile, Tesla customers express great satisfaction with their monthly payments with Tesla Insurance, which in some cases are 60% lower than they paid with previous insurers. With real-time data, Tesla is trying to do something good for its customers, save people money, and make roads safer, according to Tesla CFO Zachary Kirkhorn.

Tesla CEO Elon Musk also explained that real-time data provides feedback to Tesla. This is how the company sees whether there is an accident, whether it is large or small, and what are its causes. This allows them to think about how they can change the design of the car or the software to minimize the likelihood of a particular accident. Musk said:

“Most accidents are minor, but how do you have those accidents occur less frequently? And how do we make the repair associated with that accident super-fast? Like, aspirationally, it would be a same-day repair of a collision, which is night and day difference compared to sometimes having to wait for a month while insurance claims are settled and figured out – because Tesla is also doing collision repair.”

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