Speaking during Tesla’s annual shareholder meeting held on Tuesday, Chief Executive Officer (CEO) Elon Musk explained that the firm needs to complete a small acquisition before launching its previously announced insurance product.
It was revealed in April that the Elon Musk-led automotive and energy company was working on plans to develop its own insurance product.
Following this, a filing with the California Department of Insurance revealed that Tesla’s insurance program for its drivers is set to be fronted by State National Insurance Company, Inc., a subsidiary of Markel Corporation.
According to the filing, the Tesla Private Passenger Auto program sees State National manage a program offering private policies for “autos with Advanced Driver Assistance Systems (ADAS) in the State of California”.
Musk has now said that while the launch of the program isn’t too far away, the firm needs to complete a small acquisition first. Likely, this is because Tesla is waiting to acquire a small shell insurance company, which would likely be an already registered and licensed but now unused insurer that can give the firm a head start.
Typically, companies may acquire a shell insurance company that is licensed across all 50 U.S. states to help them make a faster start into providing a new insurance solution. These shell insurers are often used as the fronting face of a new insurance initiative, perhaps in this case managed by Markel’s State National.
The reinsurance treaty details are not available in the filings, so at this time it is unclear exactly who is taking on the bulk of the risk by reinsuring the program for Tesla.