Briefing: Musk and other tech disruptors have their eyes on insurance

Businessman Elon Musk is no stranger to the news cycle, especially these days. 

The world’s richest man has been taking up column inches throughout the start of 2025 for his close relationship to recently returned president of the United States Donald Trump.

This includes a focus on Musk’s related role as head of US governmental advisory body the Department of Government Efficiency (Doge), which is purportedly performing an audit of federal government spending to root out waste and fraud. 

This audit has been both praised and criticised for its disruptive impact and approach – while detractors argue that vital government services are being harmed, fans hit back that disruption can be a force for good in the long term, especially where processes are improved and waste is eliminated. 

Federal programmes in the US have their supporters and avid defenders – but does the insurance industry have such advocates? 

Certainly not in wider society. Those of us embedded in the sector may see and recognise the good work it does, but outside the Square Mile, the public perception of the industry is poor. 

Research from NTT Data UK and Ireland, published in July 2024, found that 48% of all insurance customers expressed doubts about whether their insurers had their best interests at heart. 

Data from consumer protection organisation Fairer Finance, published in November 2024, also evidenced the same trend, with only 54% of the consumers polled saying they trusted their insurers. 

This is important in itself because the insurance industry should obviously measure its success, at least partially, via consumer trust. But second-order impacts, in this case at least, could also present fundamental challenges for the insurance sector. 

Disruption of established ideas and industries is en vogue at the moment, particularly in the US. There can be resistance to this disruption where there is popular support of the disrupted organisation or processes, but the insurance sector across the globe finds itself in a precipitous position. 

The insurance industry is unpopular but profitable, while also largely reliant on legacy technology and traditional ways of doing things. 

Potential disruptors with deep pockets and experience are licking their lips – and their first forays have already begun. 

Making moves

In 2019, electric vehicle manufacturer and motor market disruptor Tesla, of which Musk is chief executive, launched its own insurance proposition in California.

The product was designed to provide a competitive motor premium for Tesla owners and professed to be able to offer its customers up to 30% lower prices because of the efficiencies of providing insurance from within its business ecosystem. 

A year after the product launched, in 2020, Musk even suggested that insurance could come to comprise between 30% and 40% of the Tesla business. 

And, at the beginning of February 2025, Tesla announced that it had launched a new insurance programme in California that would see it bring underwriting in-house, with a discount for customers who switched to the new policy before 14 March 2025. 

Setting up their own underwriting is far from the only way that big tech disruptors are sniffing around the insurance market either – for example, Jeff Bezos’ e-commerce giant Amazon set up its own home and contents insurance store in the UK in 2022, before closing it for business after just 15 months in operation in January 2024.

At the time, I wrote that this exit was a sign of the insurance sector’s resilience, which remains true – but the global giant failing in its first pass does not mean that the industry will forever retain its hard to disrupt status. 

Speaking to Insurance Times, tech expert and former business advisor to UK insurers for Japanese telecommunications giant NTT Data, David Basson, explained: ”I think Musk, Bezos and [Apple chief executive] Tim Cook could eat the insurance industry.

”Just thinking about massive future sectors where they hold the advantage – like embedded insurance or embedded payments. If you’re Google or Apple, you know exactly how customers are spending money via your apps and then you can build patterns of behaviour.”

This scale and integration into customers’ lives is where disruptors in big tech hold their biggest advantages, as well as their level of goodwill when compared to insurance firms. 

Tesla, for example, can easily make use of telematics data collected from its vehicles to accurately underwrite its customers – and can even use this data in a holistic fashion to make decisions on things like repairs, parts supply and even vehicle design.

All insurers can do to respond is continue to innovate and improve customer experiences, while leveraging the considerable advantage of deep expertise in providing insurance.

The question around disruption is not a question of if, it is one of when – and who that disruption serves.