GM is following Tesla’s lead with algorithm-based insurance

General Motors plans to launch an algorithm-based auto insurance plan by the end of Q1 2022 in select US states, Reuters reports. The insurance scheme will charge policyholders based on their driving performance, according to a company executive interviewed by Reuters.

GM subsidiary OnStar has sought regulatory approval for the new insurance plan in Arizona, Illinois and Michigan with its insurance partner, American Family. Andrew Rose, president of OnStar Insurance and vice president of global innovation at GM, said Reuters that the company hopes to receive the green light by the end of March.

“We’re hoping to follow that up with a dozen, two dozen, and hopefully more states.”

Currently, GM policy does not include the use of driver assistance systems. Rose also said sensor data from GM’s Super Cruise system could factor into setting rates in later versions of the insurance plan, but didn’t provide a timeline as to when that might be. place. He did, however, share how excited he was and how it could add value to the insurance industry.

“I’m very excited about what we have in the market and its ability for us to show benefits for the insurance equation.”

I think it’s a good move for GM, but some will probably think GM is the first to start implementing data-driven insurance. When Tesla announced plans to launch data-driven insurance, it was in response to the high cost of insurance for electric vehicles and an inadequate consideration of the superior safety of Tesla vehicles.

During Tesla’s second quarter 2020 earnings call, Tesla Chief Financial Officer Zach Kirkhorn said:

“Where we want to get with Tesla Insurance is to be able to use the data that’s captured in the car, in the driving profile of the person in the car to be able to assess correlations and crash probabilities and then be able to assess a premium on a monthly basis for this customer. And what makes this very exciting for us is that the amount of data available with the customer’s usage authorization is not available on any other product or any other vehicle in the world.

“So that gives us a unique advantage in terms of information. And we have a decision point here where we could take the California product and replicate it in other states or we could delay entry into other states and put more effort into telematics, and we chose this last.

I bring this up because GM’s decision is great for GM, and I hope GM will be able to do for their customer what Tesla is doing for theirs. GM is following Tesla’s lead here and this isn’t the first time automakers have followed Tesla’s lead. That’s not a bad thing, actually, but I think Tesla critics need to remember the good things Tesla is doing and stop overlooking accomplishments while praising others for following through. This is only my opinion and you are welcome to hold another.

Overall, I believe that insurance based on detailed algorithms will be essential to ensuring fairness in the insurance industry. If automakers launched their own algorithm-based insurance, it would force the evolution of the insurance industry while bringing competitive fairness. And maybe Louisiana, which has the highest premiums in the country, would benefit from the equity.

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