Rivian already is at the forefront of electrification and autonomous driving. Now it appears to be on the leading edge of another trend—carmakers that sell insurance, too. And that carries special meaning in Bloomington-Normal, where State Farm is based and where Rivian will make its EVs.
Rivian recently announced plans to sell insurance products as part of its digital ordering process. The company says by linking insurance to the vehicle itself, it will be able to diagnose issues more quickly and comprehensively, and even remotely. And those who use Rivian’s mid-level autonomous driving tool can get discounts on their insurance rates. Customers also will be able to insure their home, recreational equipment, and other vehicles.
Rivian Insurance will be available to customers in 40 states initially; insurance is generally regulated state-by-state. The policies will be underwritten by third-party carriers. Columbus, Ohio-based Nationwide confirmed to WGLT that it’s a partner. It’s unclear if there are others.
“When customers purchase their Rivian vehicle, the company will offer customers auto insurance products underwritten by Nationwide,” a Nationwide spokesperson said in a statement. “The partnership will lead to improvements in product development and customer service experience for both companies. Rivian is a great example of a company that develops products with the best interest of the customer in mind. They are revolutionizing the electric vehicle and connected car industry, and Nationwide is proud to provide our best-in-class products and digital infrastructure to help them meet their customers’ needs.”
What Rivian is doing isn’t entirely new. EV pioneer Tesla started selling insurance to California vehicle owners in 2019 through its partner, State National. GM recently launched data-driven coverage via its OnStar Insurance subsidiary.
The reason it’s possible is because of telematics, also known as usage-based insurance (UBI), a trend that’s grown within the insurance business for the past decade or so. That’s technology inside of a car that can track how fast you accelerate, how hard you brake—in other words, how risky you are. With super-connected vehicles like Rivian’s, there is simply more data available.
“We’re going to continue to see more of this,” said Sam Abuelsamid, principal analyst for e-mobility at Guidehouse, based in Detroit. “It’s because the automakers have access to that data, and they can work with the insurance providers to be able to give an opportunity to their customers to maybe get lower premiums.”
Drivers are warming up to the idea. Survey results from May 2020 showed about half of drivers were comfortable sharing their data with their insurer, according to Mark Friedlander, a spokesperson for the Insurance Information Institute, an industry think tank.
“We saw significant growth of this technology during the pandemic,” Friedlander said. “(Usage-based insurance) was a key factor in U.S auto insurers providing $14 billion in premium relief to drivers last year, because UBI was used to indicate how much less people were using their vehicles.”
Rivian did not respond to WGLT’s requests for comment for this story. But experts say there are a few different reasons why it would want to sell insurance. WGLT previously reported on Rivian’s insurance plans in 2020 as it staffed up its team.
Electric vehicle customers, including Tesla’s, have often complained about getting slammed with higher rates.
There also may be an opportunity for a little extra revenue. Typically, there’s some sort of revenue-sharing model between the automaker and its third-party carrier, said Abuelsamid.
“The carmakers are essentially acting as brokers here, more than insurance companies,” he said. “So they may get a share, a hit, of the premium payments as long as the customer stays with that program.”
And, as a marketing tool, Rivian can argue that tying together insurance and the vehicle will produce a better customer experience. Every Rivian vehicle is equipped with the company’s Driver+ suite of safety technology. Rivian Insurance customers will automatically receive a Driver+ rate reduction, in addition to any discounts for using the feature that automatically steers and adjusts speed on the highway.
“They can provide a lot of services to their customers. They can develop a one-stop shop business model for their customers,” said Yayuan Ren, an associate professor in risk management and insurance at Illinois State University’s College of Business.
There is disagreement about whether plans like Rivian’s pose a competitive threat to legacy auto insurance companies such as State Farm or Allstate. Presumably, a customer could just decline Rivian Insurance and buy a policy out on the open market—with no middleman.
“They pose a competitive threat to the existing insurance industry,” said Ren. “They bring competition to this industry, and that’s beneficial to customers.”
Mark Friedlander with the Insurance Information Institute disagreed. After all, Rivian isn’t actually underwriting the policies. A traditional insurer is still getting business.
“This is a new way to market your business to drivers. It’s expanding the marketplace that’s already out there for telematics and making it easier to access coverage,” said Friedlander. “It’s clearly an add-on. It’s complementary to what’s already out there in the marketplace. We don’t see it as competition.”