Tesla Inc.'s underwriting subsidiaries saw their insurance premiums surge in all of the eight states where they write business in 2023, according to an S&P Global Market Intelligence analysis.
The highest premium turnover in 2023 was $53.0 million in Texas, constituting 48.2% of the insurer's total direct premiums written for 2023. The insurer started writing insurance business in the Lone Star State in first quarter 2023. Its first-quarter premiums amounted to $4.3 million.
Tesla's combined premiums surge in 2023
Tesla's combined direct premiums written more than doubled in 2023, with its direct premiums written from managing general agent (MGA) relationships also increasing annually. Tesla saw its combined premiums rise to $517.6 million in 2023, more than double the $255.5 million recorded in 2022.
The combined premiums include those produced from Tesla's MGA relationships, plus those generated by its direct underwriter. A managing general agent is a specialized insurance broker that has been granted certain powers and performs several functions generally handled by an insurance company, whereas, a direct underwriter such as Tesla Insurance Co. underwrites the business itself.
Tesla's MGA relationships generated total direct premiums written of $407.8 million in 2023, a substantial rise compared to the $242.9 million recorded a year prior, according to information contained within Note 19 of the annual US regulatory statements.
The majority of premiums are from the MGA relationship with State National Insurance Co. Inc., a subsidiary of Markel Group Inc., which contributed $387.2 million to the total combined premiums in 2023.
However, Tesla Insurance Services Inc. is aiming to increase business for Tesla Insurance Co. in California. It is looking to offer a one-time discount of 5% for renewing customers' six-month private auto premium if they have their policies underwritten by the in-house insurance company instead of their MGA relationship.
– Read about Tesla's insurance business performance in the first quarter of 2023
Loss ratios improve YOY
The direct incurred loss ratios for Tesla's private-passenger auto line of business decreased year over year. However, the loss ratios of Tesla are higher on average compared to the wider industry, topping 110% for 2022 and 2023, whereas the industry loss ratios remained around the 80% range.
Tesla had a direct incurred loss ratio of 114.7% in 2023, recording a 1.9-percentage-point improvement from the previous year, while the industry loss ratios improved by 4.6 points year over year, coming in at 75.5% in 2023.
