Direct Line offers 5-percent Tesla 'auto-pilot' incentive

(Reuters) - Britain’s largest motor insurer Direct Line is offering Tesla Inc drivers in Britain a 5-percent discount for switching on the car’s autopilot system, seeking to encourage use of a system it hopes will cut down on accidents.

A photo illustration shows insurance renewal notices from Direct Line in London October 10, 2012. REUTERS/Suzanne Plunkett

The move - confirmed by company representatives in response to Reuters’ questions - is Tesla’s only tie-up in the UK and comes at a time when the company is trying to convince insurers that its internet-connected vehicles are statistically safer.

Direct Line said it was too early to say whether the use of the autopilot system produced a safety record that justified lower premiums. It said it was charging less to encourage use of the system and aid research.

“At present the driver is firmly in charge so it’s just like insuring other cars, but it does offer Direct Line a great opportunity to learn and prepare for the future,” said Dan Freedman, Head of Motor Development at Direct Line.

Direct Line sells insurance policies to customers introduced to it by Tesla. Tesla then provides information on the features and capabilities of its vehicles to help Direct Line set insurance prices.

According to Tesla’s website, some of the autopilot functions include matching speed to traffic conditions, automatically changing lanes without driver input and even self-parking. The car can also be “summoned” to and from a garage.

“Crash rates across all Tesla models have fallen by 40 percent since the introduction of the autopilot system ... However, when owners seek to insure their Tesla vehicles, this is not reflected in the pricing of premiums,” Daniel Pearce, Financial Analyst at GlobalData, said.

“The insurance industry will gradually respond to these developments,” Pearce added.

Direct Line, which is enjoying soaring motor insurance prices in Britain, said it sets premiums for Tesla drivers based on the risk they present, including who is driving, their age, driving experience and claim history.

“We aim to offer competitive premiums and we’ve welcomed a good number of Tesla drivers in the UK,” Freedman said.

Tesla declined to specify how many vehicles with autopilot capabilities currently are on British roads but industry figures pointed to UK data on imports, which suggest the number is more than 4,500.

Reporting by Noor Zainab Hussain in Bengaluru; Additional reporting by Carolyn Cohn in London; Editing by Patrick Graham