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Even Tesla's Insurance Arm Is Getting Wrecked Right Now (insideevs.com)

submitted 2 days ago by [email protected] to c/Cyberstuck

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In 2019, Tesla set out to lower insurance rates for owners of its electric cars. The goal was simple, at least in theory: fix the broken cost of car insurance. Instead, Tesla may have broken its own calculator trying to make sense of repair costs.

See, Musk's vision of Tesla's insurance product was that traditional companies just didn't "get it." Tesla's data claims that its Full Self-Driving software has fewer accidents than a human driver. Plus, its cars are rolling computers that can collect copious amounts of data on its drivers and adjust risk based on their driving. So why wouldn't drivers get a lower rate for putting around with FSD enabled if they also happen to be a safe driver? Tesla quickly found out that despite these assumptions, it's still taking a bath on claim-related losses.

The data comes from S&P Global and shows that the automaker's insurance subsidiary took a loss ratio of 103.3 in 2024. The loss ratio, for those who don't know, is the amount of money that Tesla pays out per claim versus the money it takes in from premiums. The lower the number, the better, and break-even is a flat 100. In 2024, the rest of the industry averaged 66.1.

Archive link: https://archive.is/G4Kvj

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[–] [email protected] 7 points 1 day ago

I prefer it when my insurance doesn't drop me 3 micro seconds before I wipe out a minivan full of lawrers next a bus of witness all livestreeming to kick.

[–] [email protected] 14 points 2 days ago (2 children)

Umm isn’t this good for Tesla customers…? Seems like a low loss ratio is only good for the insurance company since they either up the premiums or pay out less…

[–] [email protected] 13 points 2 days ago (1 children)

Sure. I mean, prices will go up because a public company cannot operate at a loss. They just haven't gone up yet.

But it also shows that Tesla underestimated the claims their cars would generate.
And it's Tesla that has all the information they could possibly want.
So either Tesla drivers are particularly bad, all the fancy tech isn't helping (or isn't helping enough), or the cars are the liability.

Could be as simple as bad business planning.

It certainly justifies other insurance companies charging more for a Tesla.

[–] [email protected] 6 points 2 days ago (1 children)

There is another possibility: that Teslas are stolen, hit, or damaged more frequently than expected (by Tesla). That would be something that all the self-driving data in the world wouldn't be able to predict.

Unrelatedly, I'd like to point out that a loss ratio of 66 means on average we only get 2/3s of our insurance premiums back as payout. That is outrageously low and explains why car insurance companies can afford all that gimmicky marketing.

[–] [email protected] 5 points 2 days ago

Being a unibody design, even a small fender bender can be extremely costly for a Tesla. An accident that merely dents a fender in a traditional SUV could deform the frame of a Tesla. Replacing a fender is trivial, a frame not so much.

[–] skisnow 7 points 2 days ago

Sure, but it's another hit for the myth of the "genius businessman" Musk. Though I'm sure he and his stans would claim it was a Loss Leader all along.