New, “compelling” Tesla Private Passenger Auto insurance program “grounded in innovation”
Sacramento, CA (May 1, 2019) – Tesla will launch an insurance program for its drivers via a partnership with State National Insurance Company, a subsidiary of Markel Corporation, according to a filing with the California Insurance Department’s rate regulation division.
“We are creating a Tesla insurance product and we hope to launch that in about a month,” said Tesla CEO Elon Musk during his company’s earnings call on April 24. “It will be much more compelling than anything else out there.”
The filing indicates State National Insurance Company (SNIC) will serve as a fronting company for the innovative program – which will see SNIC offering private insurance policies for “autos with Advanced Driver Assistance Systems (ADAS) in the State of California” – with most of the risk being reinsured by a third-party.
State National Insurance “provides the plumbing to move risk to capital … and they are quite honestly the best in the business in terms of offering that fronted model,” said Markel Co-CEO Richard Whitt, addressing a question during the insurer’s May 1st earning call.
The Tesla Private Passenger Auto program will be administered separately from other auto insurance programs under the State National banner.
Tesla vehicles equipped with autonomous features will be eligible for credits and savings based on the level of autonomy of the vehicle, according to the filing, which describes how State National will harness the data provided by Tesla’s connected vehicles to provide benefits to the insurance consumer:
“The purpose of the product is to use Tesla’s proprietary technology to lower costs and improve the customer experience by embedded technology to support the underwriting, rating, claims, repair, and product manufacturing network, including direct data feeds with customer permission, when required, that eliminate frictional costs and inefficiencies inherent in traditional insurance processes.”
The program will be marketed and distributed through a digital InsurTech platform by Tesla Insurance Services, and State National plans to use “technology-driven insights” to “pass the savings yielded directly to the customer while simultaneously improving the customer service experience.” Tesla’s Autopilot system, which enables a vehicle to steer, brake and accelerate automatically, has been shown to reduce auto accident rates, but in addition it collects large quantities of data which can be used to create and refine a clear risk profile for a given car and driver.
“We’re seeing all this innovation in the insurance industry, and often the people who have these innovative ideas have a hard time navigating the regulatory environment and being able to execute on their innovative ideas – that’s where State National can come to the table and help them,” said Richard Whitt during Markel’s earning call. “In the case of the partnership with Tesla, State National is providing just that. They are supporting innovative solutions that Tesla has come up with risk-taking partners. State National does not retain any business, their model is not to retain any of the business, and so this business is being seated on to Tesla’s risk-taking partner. And I don’t want to say any more than that … We were just happy that we could step in at State National and assist them in what they were trying to do.”
State National’s application to the California Department of Insurance was approved on April 9.
1. Read a transcript of the call.
About State National Companies, Inc.
State National Companies, Inc. is a leading specialty provider of property and casualty insurance services operating in two niche markets across the United States. In its Lender Services segment, the Company specializes in providing portfolio protection solutions which insures personal automobiles and other vehicles held as collateral for loans made by credit unions, banks, and specialty finance companies. In its Program Services segment, the Company leverages its “A” (Excellent) A.M. Best rating, expansive licenses, and trusted reputation to provide access to the US property and casualty insurance market in exchange for ceding fees. To learn more, please visit statenational.com.
About Markel Corporation
Markel Corporation is a diverse financial holding company serving a variety of niche markets. The Company’s principal business markets and underwrites specialty insurance products. In each of the Company’s businesses, it seeks to provide quality products and excellent customer service so that it can be a market leader. The financial goals of the Company are to earn consistent underwriting and operating profits and superior investment returns to build shareholder value. Visit Markel Corporation on the web at markelcorp.com.