Edison Insurance was founded in 2020 in Boston, Massachusetts by CEO and co-founder Karn Saroya. The insurtech startup focuses on offering innovative usage-based auto insurance powered by telematics and AI.
Edison’s mission is to “revolutionize the auto insurance industry through a customer-centric model powered by technology.” The company aims to personalize insurance rates based on actual driving behaviors, rather than using traditional factors like demographics.
The name “Edison” pays homage to inventor Thomas Edison and his spirit of innovation. The company values include:
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Customer obsession: Putting the customer first in everything they do, from product design to customer support.
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Innovation: Constantly striving to improve and find new ways to leverage technology to benefit customers.
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Data-driven decisions: Basing strategies and operations on real data and insights vs assumptions.
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Inclusion: Fostering a diverse and inclusive workforce and products.
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Integrity: Operating transparently and ethically.
Edison seeks to make auto insurance fairer, more personalized, and powered by advanced technology. The company has seen rapid growth since its founding by offering usage-based insurance and focusing on exceptional customer experiences.
Edison’s Usage-Based Insurance Model
Edison Insurance has pioneered a new model for auto insurance pricing called usage-based insurance. With this model, Edison uses actual driving data to determine insurance rates rather than relying solely on traditional factors like age, gender, and credit score.
Here’s how it works: Edison policyholders install a small wireless device in their car that tracks mileage, speed, acceleration, braking, and time of driving. This gives Edison granular data on real driving behaviors. Safe drivers who drive less, avoid sudden acceleration and braking, and stay within speed limits are rewarded with significant discounts on their insurance. On the other hand, risky driving behaviors like speeding, abrupt braking, late-night driving, and frequent long trips can increase rates.
The usage-based model benefits safe and low-mileage drivers the most. Those who drive less than 5,000 miles per year and exhibit safe habits may see discounts up to 50%. The average Edison customer saves over $500 per year compared to traditional insurance pricing.
By directly linking driving behaviors to insurance rates, Edison incentivizes customers to drive more carefully. The program encourages positive change in driving habits over time. Customers can track their driving through an online dashboard and work to improve their scores.
Edison’s usage-based insurance represents an innovative approach to pricing auto insurance fairly based on actual risk, rather than relying on broad demographics and proxies. Drivers concerned about insurance affordability can benefit from taking control of their rates through safer driving.
Edison’s Partnerships
Edison Insurance has partnered with several major automakers to provide usage-based insurance for their vehicles. Their most notable partnerships are with Tesla, General Motors, and Ford.
Tesla
In 2019, Edison announced a partnership with Tesla to provide customized insurance plans for Tesla vehicles. This customized coverage takes into account the advanced driver assistance and safety features of Tesla cars, like Autopilot. Rates are determined based on real-time driving behavior data from the car.
General Motors
Edison partnered with GM in 2020 to be the exclusive provider of usage-based insurance for owners of connected GM vehicles. The program, called OnStar Insurance, determines rates based on driving data collected from connected GM vehicles. This provides drivers the opportunity to save money by driving safely.
Ford
In 2021, Edison began offering usage-based insurance to Ford owners through the FordPass app. Drivers share data directly from their Ford vehicle to determine personalized insurance rates. This allows Ford drivers to save money by proving they drive safely.
These major partnerships with automotive brands have been key to Edison’s growth and success in the usage-based auto insurance market. By leveraging data from connected vehicles, Edison provides a more customized insurance experience.
Edison’s Technology
Edison Insurance utilizes advanced technology to power its usage-based insurance model. The company has developed proprietary telematics hardware and software that it integrates into insured vehicles. This technology collects large amounts of data on driver behavior, including acceleration, braking, speed, mileage, time of day driven, and more.
The telematics device transmits this driving data in real-time back to Edison via cellular connectivity. Edison ingests and analyzes this data using machine learning algorithms to build a highly detailed profile of each driver. This allows Edison to accurately assess driving risk and price insurance premiums proportionally to how, when, and how much someone drives.
Edison’s telematics hardware is designed to be small, easy to install, and unobtrusive. The devices plug into the OBD-II port found in most modern vehicles. Edison handles installation of the devices at no additional cost when a policy is started. The telematics software seamlessly integrates with Edison’s policy management systems. It automatically adjusts premiums based on actual driving data.
The sophistication of Edison’s proprietary technology provides the foundation for its innovative usage-based insurance model. The granularity of data collected surpasses traditional methods of assessing driving risk. This enables a new paradigm of highly personalized insurance, priced specifically to each policyholder’s driving behavior.
Customer Experience with Edison
Edison Insurance prides itself on providing an excellent customer experience. Here are some testimonials and reviews from Edison customers:
“I switched to Edison Insurance because of their usage-based model and I’ve been very happy with my decision. The app is easy to use and I feel like I’m getting a fair rate based on my actual driving habits. Whenever I’ve had to contact customer service, they’ve been friendly and helpful. I would definitely recommend Edison!”
“As a new driver, I was thrilled to find Edison Insurance. Their rates are so affordable compared to other companies. The app encourages me to drive safely so I can keep my costs down. I had to file a claim after a minor fender bender and the claims process was smooth and painless.”
“Edison Insurance has been a game changer for my family. We have teenage drivers so our auto insurance rates have always been high. With Edison’s usage-based pricing, our costs are finally reasonable. The whole experience dealing with them has been fantastic. I tell all my friends about Edison!”
Based on reviews, customers appreciate Edison’s fair usage-based pricing, easy-to-use technology, and helpful customer service. Drivers report saving money while still getting great coverage. Many customers recommend Edison Insurance to their family and friends.
Edison’s Financial Performance
Edison Insurance was founded in 2020 and has quickly grown to be a major player in the usage-based auto insurance industry. The company has raised over $500 million in funding from top-tier investors including Sequoia Capital, Lightspeed Venture Partners, and Nationwide Insurance.
Edison’s usage-based model has proven to be very profitable, as the company is able to accurately price risk based on actual driving data. By the end of 2021, Edison was generating over $100 million in annual revenue and reached profitability just two years after launch.
The company’s rapid growth and strong unit economics have enabled it to continue raising large funding rounds to fuel expansion. In 2022, Edison raised another $200 million led by Coatue Management. Edison plans to use these funds to move into new states and insurance lines beyond just auto.
Edison’s innovative data-driven approach has made it one of the fastest growing and most financially successful insurtech startups. With strong revenue growth, profitability, and over $700 million in total funding, Edison is poised to continue disrupting the massive $300 billion car insurance industry in the years ahead.
Edison’s Insurance Products
Edison Insurance offers a variety of insurance products for personal auto, rideshare, and commercial fleets. The company prides itself on flexible, customized insurance policies that are tailored to each customer’s specific needs.
For personal auto insurance, Edison has usage-based policies that base premiums on actual driving data rather than proxies like age, gender, and location. Drivers can save money by proving they drive safely and minimizing unnecessary trips. Edison installs a small telematics device in the vehicle to track mileage, acceleration, cornering, speeding, and phone distraction. Based on the data, Edison provides personalized feedback and coaching to improve driving habits.
Rideshare drivers for services like Uber and Lyft can also benefit from Edison’s insurance products. The company offers hybrid personal and commercial policies to fully cover periods when drivers are online but without passengers, carrying passengers, and offline. This protects against potential coverage gaps between personal and rideshare insurance.
For commercial fleets, Edison focuses on small to mid-sized businesses with 5-100 vehicles. They provide usage-based policies to reward safe driving practices and incentivize fleet optimization. The telematics devices track detailed vehicle analytics to identify high-risk drivers and provide training. Edison claims this can reduce fleet accidents by up to 20%.
Across all products, Edison aims to make insurance fairer, more flexible, and personalized through data and technology. They continue innovating new ways to align premiums with actual driving behaviors.
Availability of Edison Insurance
Edison Insurance currently offers policies in over 15 states across the United States. The company started by offering policies in California, its home state, before expanding to other western states like Washington, Oregon, and Arizona. More recently, Edison has moved into Midwestern states like Illinois, Ohio, and Michigan.
Some of the key states where Edison operates include:
- California
- Washington
- Illinois
- Michigan
- Ohio
- Oregon
- Arizona
The company continues to have plans for further geographic expansion. Some of the states Edison is targeting next include:
- Texas
- Florida
- Pennsylvania
- New York
- Georgia
Expanding into these large states will allow Edison to reach tens of millions of additional potential customers. It requires not just obtaining regulatory approval in each state, but also establishing local operations and partner networks.
Nonetheless, Edison sees its broad geographic availability as a key advantage over smaller competitors. The company can leverage its scale, technology, and data across multiple states. While being thoughtful about localization, Edison aims to provide a consistent customer experience nationwide.
Competitors to Edison
Edison Insurance faces competition from several other usage-based insurance providers. These include:
Other usage-based insurance providers
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Metromile: Metromile is one of Edison’s biggest competitors in usage-based car insurance. Like Edison, Metromile offers pay-per-mile insurance and charges customers based on how many miles they drive. Metromile also uses telematics and an app to track customer driving.
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Root Insurance: Root is another pay-per-mile insurance provider that competes directly with Edison. Root uses smartphone technology and driving data to price car insurance rates based on driving habits.
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MileAuto: MileAuto offers low-mileage drivers discounted car insurance rates based on actual mileage driven. They use a small wireless device plugged into a car’s OBD-II port to track mileage.
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TrueMotion: While not directly an auto insurance provider, TrueMotion offers technology and data analytics services around usage-based insurance. They partner with insurance companies to provide driving data.
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The Floow: Similar to TrueMotion, The Floow is a telematics company that provides data services to auto insurers for usage-based programs. They track driver behavior through a mobile app.
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Cambridge Mobile Telematics: This telematics and analytics company powers usage-based insurance programs by collecting driving data through smartphone apps and OBDII devices. They partner with insurers like Edison.
So in summary, Edison faces significant competition from both direct usage-based insurers like Metromile and Root as well as driving data providers like TrueMotion and Cambridge Mobile Telematics. However, Edison’s strong proprietary technology and analytics helps differentiate them in this crowded market.
The Future of Edison Insurance
Edison Insurance has an exciting future ahead as the usage-based insurance industry continues to grow. Here are some predictions for Edison’s future opportunities and challenges:
Growth Potential
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Usage-based insurance is still in the early adoption phase, with plenty of room for growth as more consumers become comfortable sharing driving data. Edison is poised to capitalize as usage-based insurance expands.
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Self-driving cars will create new insurance needs that align with Edison’s usage-based approach. Edison can position itself as an innovative leader.
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New distribution channels like embedded insurance in vehicles and mobility platforms will emerge. Edison can form strategic partnerships.
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International expansion presents a major opportunity as other countries adopt usage-based insurance.
Challenges
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As the usage-based insurance market matures, increased competition will create pricing pressure. Edison will need to refine its risk models.
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Privacy and data security concerns may present regulatory challenges as Edison expands data collection.
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Adoption of autonomous vehicles and shifts to mobility services could disrupt traditional insurance models. Edison will need to adapt.
Growth Predictions
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Analysts predict the usage-based insurance market will grow by 25-35% annually over the next 5 years.
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Edison is well positioned for rapid growth, with projections of 40%+ annual revenue increases if it can maintain its innovative edge.
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International expansion, new partnerships, and moves into autonomous vehicle insurance could fuel exponential growth for Edison in the long term.