Tesla, Eye in the Sky & InsurTech

Tesla, Eye in the Sky & InsurTech

Tesla plans to roll out its own insurance product. The insurance industry has known for years that the self-insurance wave was coming.

“I am the eye in the sky… I can read your mind… I am the maker of rules..” So the song goes and so goes Tesla. Those of us who have spent time in the insurance industry or “InsurTech” have known for years that the self-insurance wave was coming. Tesla’s plans to roll out its own insurance product makes all the sense in the world. Tesla’s automobiles after all know much about you – at least insofar as your driving habits (and a bit more).

Your driving data, where you live and other demographic and behavioral data elements – both direct and inferred – power actuarial models used to make insurance underwriting and premium pricing decisions. Who is more qualified than Tesla to price your Tesla auto insurance? Tesla has a sufficient number of vehicles on the road, access to the requisite data (“The ‘Eye in the Sky’ reference”) and the ability on the back-end to process and “productize” this information. The same holds true for a number of original equipment manufacturers (“OEMs”) that sell connected devices, appliances and the like (Amazon, Alibaba, Facebook and Google also have sufficient personal data to offer insurance products but we will steer clear of those companies for purposes of this discussion).

The cloud makes it possible to track usage in real-time (we covered this topic in a recent TEK2day Podcast episode with Zuora founder & CEO Tien Tzuo, available below). Expect more OEMs across a variety of industries to roll out proprietary insurance offerings and more sophisticated warranties. The “one-size fits all” warranty model will eventually disappear as real-time usage may be observed and factored into the warranty.

The equation where we share more data with OEMs and the world in general (losing privacy in the process), in exchange for better service and potential monetary gain is the new reality.

Eye in the Sky & InsurTech