By: Luke Jones, Published on May 31, 2018 06:26 PM, Last Update on May 31, 2018 03:28 PM
Tesla is pushing forward with its plans to create its own auto insurance division, which would allow customers to directly cover vehicles like the Tesla Model S directly with the company. The US-based automaker is among the first vehicle manufacturers to actively pursue proprietary insurance, but is unlikely to be the last.
The auto insurance industry is already on the defensive as it could face increased competition as the market itself declines with the advent of autonomous vehicles. Tesla’s move towards becoming an insurance provider seems to stem from a disagreement with the insurance industry.
Carriers in the United States said last year they would increase insurance rates for Tesla vehicles as owners had “abnormally high claim frequencies”. The result has seen the Tesla Model S become the most expensive car to insure in the US, with the average yearly cost sitting at $1,789.48, according to the Insurance Institute for Highway Safety.
Tesla responded to the increase in premium cost by saying it was misleading to compare high-powered Tesla vehicles with normal cars. The company also cryptically said there would always be a company that did not charge too much.
“Tesla guarantees that there will always be an insurance provider that will charge less for a Model S or X than any other car with a similar driver, price and vehicle category,” the company said.
At the moment, Tesla has been working with some insurance companies to develop programs. InsureMyTesla is available in Australia and Hong Kong and could soon come to North America. However, it is clear one day the company may attempt to branch out on its own, or take a more stable presence in the insurance industry.