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Elon Musk sends rockets into space, but is he smart enough to run an insurance company?
Is Elon Musk smart enough to run an insurance company?
Elon Musk sends rockets into space, but is he smart enough to run an insurance company?
There's no question about Elon's financial ability to bankroll an insurance business. His $84 billion fortune makes him worth more than the combined value of QBE, IAG and Suncorp.
There's no question about Elon's financial ability to bankroll an insurance business. His $84 billion fortune makes him worth more than the combined value of QBE, IAG and Suncorp.
In between launching rockets and announcing his support for Kanye West's presidential bid, Elon Musk has named insurance as the next industry he is going to disrupt.
Elon plans to build a major insurance company and use the data captured while driving your car “to be able to assess correlations and probabilities of crash.
According to Elon, the data gathered from Tesla's vehicles can be used to offer premiums that are lower than traditional insurers. The vision outlined by Elon is the holy grail for insurance companies: Using data to predict claims.
But there are two problems:
Privacy Laws - Do you really want Elon Musk knowing that you have a lead foot and apply lipstick while driving?
That random crazy driver who rams into your Tesla - No amount of driver data can predict when you are going to be unlucky. Another challenge for "Tesla Insurance" is that it's only for your Tesla. You will have to insure your BMW and Porsche elsewhere. That could be a big problem. You will lose your multi-policy discount and have the bother of dealing with another insurance company.
What surprises me about Elon's vision for "Tesla Insurance" is his focus on price.
What does the Tesla brand mean to you? To me, its technology, luxury and high performance. Tesla is not a budget brand. Tesla competes with the BMW M3 and Mercedes AMG.
So why is Tesla Insurance going to be cheap and cheerful?
Elon Musk is correct in his thinking that insurance is a sitting duck for him to disrupt and gobble up a significant market share. But I don't think price should be his focus.
There are many clunky things about insurance that Elon could improve. Tesla Insurance should provide the Tesla experience and remove these quirks, for example:
Paperless insurance: No claim forms or proposal forms
Door-to-door pick up and return when your Tesla needs to be repaired
Replacement Tesla when your Tesla is in the workshop (no more Hyundai hatchback!)
I am sure that people with $124,990 to pay for a new Model S would be prepared to pay a little extra to protect their pride and joy.
Management Liability insurance is designed to provide protection to both the business and its directors or officers for claims of wrongful acts in the management of the business.
A business insurance pack can provide cover for your business premises and contents, against loss, damage, theft or financial loss from an insured interruption to the business.
I am sure that people with $124,990 to pay for a new Model S would be prepared to pay a little extra to protect their pride and joy.
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Nathan Rayner
Competing on price is easy. Revolutionizing insurance is a massive challenge. If anyone can do it, Elon can.
But Elon should remember, nobody ever bought a Tesla because it was cheap.
General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.
All information above has been provided by the author.
All information above has been provided by the author.
Nathan Rayner, McLardy McShane Insurance Brokers, ABN 80 665 553 220
QUESTIONS? JUST ASK
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