Automakers in insurance game with tech tools

As automakers load vehicles with more safety features, enhanced connectivity and over-the-air updates, some are using the technology to tap into a new revenue stream: auto insurance.Tesla Motors Inc. started offering insurance in late 2019, and Ford Motor Co. and General Motors launched programs in 2020. Ford and GM say entering the insurance space was a natural expansion as they enhance the connectivity and safety technology in their vehicles.Automakers "may be in a pole position to capture real-time data to improve the risk pricing/underwriting functions" of auto insurance, Adam Jonas, equity analyst with Morgan Stanley, wrote in a report in December. "At the same time, the car itself doubles as a captive mobile distribution node to engage with the customer on a subscription basis and in real time."Traditional insurance providers have lagged automakers in technology advancement, but in an already competitive insurance market, automakers could have "a tough hill to climb," said Kyle Schmitt, global managing director of insurance business intelligence at J.D. Power.Still, Schmitt expects other automakers will join the insurance business to gain revenue and capitalize on safety features.An insurance role also broadens automakers' contact with customers and can increase loyalty, said Michael Benoit, partner at Hudson Cook's automotive law practice in Washington, D.C.

Automakers in insurance game with tech tools

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