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Tesla, Other Car Makers Have Edge Over Incumbent Auto Insurers: Moody’s

March 10, 2022

Tesla and other car makers represent a growing threat to incumbent auto insurers, even though they have little direct impact on the insurance market today, Moody’s Investors Services said.

In a report titled, “Tesla’s insurance venture puts incumbents under added pressure to innovate,” Moody’s reviews the competitive advantages of Tesla’s insurance business—mainly, the advantage of having data generated by Tesla cars that can monitor driver behavior. With the data, Tesla has the ability to offer substantial premium savings to safe drivers. In addition, Tesla likely has much lower operating expenses than traditional insurers, who incur costs of 20-30% of premiums for marketing and claims handling, Moody’s analysts noted in the report.

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