General Motors (GM) plans to unveil an algorithm-based auto insurance plan. Reuters reports that the company is seeking regulatory approval for a new data-based insurance plan in Arizona, Illinois, and Michigan. GM shares fell 1.20% to close at $52.64 on January 24.
General Motors is a U.S. company that designs, manufactures, and sells cars, trucks, and automobile parts. It is also engaged in electric vehicle (EV) development. General Motors’ upcoming earnings report for Q4 2021 is scheduled for February 01, 2022.
Algorithm-Based Insurance Plan
Together with its insurance partner American Family, the automaker intends to launch the algorithm-based insurance plan in March upon securing regulatory approval. Under the new insurance plan, the company will charge policyholders based on their driving performance.
The automaker plans to leverage sensor data from the “Super Cruise” system in formulating rates for the new insurance plan. The system uses an in-cabin camera to monitor drivers’ eye and head movements, which would then be taken into consideration for rate setting.
However, General Motors and other automakers face an uphill battle to convince state insurance commissions about the use of granular data in rate setting. The commissions are yet to approve data from automated systems for rate setting. GM is targeting up to $6 billion in insurance revenue by 2030.
Wedbush analyst Daniel Ives recently reiterated a Buy rating on General Motors stock with an $85 price target, implying 61.47% upside potential to current levels. The positive rating stems from growing confidence that GM will unveil a slate of electric vehicles over the next 18 months.
Consensus among analysts is a Strong Buy based on 11 Buys and 3 Holds. The average General Motors price target of $75.23 implies 42.91% upside potential to current levels.
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