Auto insurance

Tesla Insurance could pose a long-term threat to the US auto insurance industry: Morgan Stanley

Morgan Stanley analysts have said that in the long term, Tesla Insurance could pose a threat to the U.S. auto insurance industry of about $260 billion, following the company’s expansion of its new insurance product. insurance that uses real-time driving behavior data.

The insurance offer was recently launched in Virginia, Colorado and Oregon.

It was also reported that the company plans to be a full auto carrier in these three states.

In a recent report, analysts said Tesla Insurance does not pose a threat to the U.S. auto insurance industry in the short term, but it most likely does in the long term.

Analysts said they believe successful long-term market penetration hinges on pricing sophistication and distribution strategy.

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In addition, they added that Tesla will undoubtedly have superior data on their own cars, but also indicated that the real-time feedback loop on driving behavior, which the insurance offer contains, could lead to a safer driving, which could lead to lower premiums and higher participation.

“We will be watching TSLA’s underwriting results closely as it gains traction,” the analysts said.

Additionally, the report highlighted how direct-to-consumer (DTC) delivery has become a proven strategy to gain market share, and analysts in the future expect DTC coupled with embedded insurance to become the “new wave” of personal insurance distribution.

Meanwhile, analysts said Tesla as one of the top 10 auto insurers isn’t a “wild expectation,” adding that the insurance premium forecast for Tesla is worth around $9.6 billion. by 2031, assuming fairly conservative take-up rates by Tesla car owners.

The analysts said, “Assuming the industry continues to grow at around 3% per year, that would yield a market share of 2.8%, breaking the top 10 for US P&C market share.”

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