For insurance companies in the US, Tesla is forcing them to seriously consider how their policies will change as the cars people drive become safer through Autonomous driving technology.
The Farmers Insurance partnership with a Tesloop, a small ride-sharing service that transports customers in southern California using Tesla cars, wrote a new auto policy for Tesloop that slashes the services previous insurance costs by 25% by reducing the risk premium said Teslop CEO Rahul Sonnad.
The partnership gives Farmers Insurance a small test case to see the type of insurance policies that can be designed around autonomous vehicle technology.
Mariel Devesa, Farmers’ head of production innovation said “For us it’s understanding what is new technology and then understanding what are the business models of these new products that are trying to disrupt the industry,”
Tesloop is only limited to six cars in its fleet, but the partnership with Farmers Insurance is providing the insurance companies with some insight into the inevitable disruption to come with autonomous vehicle technology.
Tesla is already selling insurance with its cars in Australia and Hong Kong as part of its global vision to include insurance and maintenance in the sale price.
According to a report by the National Highway Traffic Administration (NHTSA), crash rates for Tesla vehicles have dropped 40% since Autopilot was first installed, and the cars are designed to get safer with Tesla’s new Autopilot 2 technology. Tesla CEO Elon Musk said the company wants to ensure agencies are dropping costs proportionate to the reduced risk of driving a Tesla.
These kinds of price adjustments could hurt the industry. The personal auto insurance sector could shrink to 40% of its current size within 25 years as cars become safer with autonomous tech, according to a report by the global accounting firm KPMG.
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