Insurance Curator LONDON and NEW YORK — Auto insurers across developed countries are stepping up the use of telematics — the collection of driving data from smartphones, on‑board devices and embedded vehicle systems — to expand usage‑based insurance (UBI) programs that reward safer drivers and, insurers say, shrink high‑risk pools and reduce losses. The shift, driven by falling hardware costs, better mobile analytics and competitive pressure, has produced double‑digit growth forecasts and millions of telematics policies in force in Europe and North America, even as privacy regulators and consumer advocates tighten scrutiny and lawmakers move to restrict data use. (Who: insurers and regulators; What: accelerated telematics adoption and UBI expansion; When: through 2024–2026 and into forecast windows to 2028–2029; Where: United States, United Kingdom, European Union, Canada and other developed markets; Why: to price risk more granularly and lower claims costs.) (iotbusinessnews.com)
What’s happening — the short version
- Market analysts estimate tens of millions of telematics policies are now active across Europe and North America, with the number rising rapidly after a recent pause as insurers migrate from plug‑in “black boxes” to smartphone and OEM‑embedded solutions. Berg Insight and other industry forecasters say telematics policies in Europe reached the low‑to‑mid‑teens of millions by the end of 2023–2024 and that North American telematics policies have been growing strongly as well. (telematicswire.net)
- Carriers are positioning UBI as a tool to attract safer, lower‑cost drivers into separate pricing pools, improve underwriting, and offer ancillary services (crash response, theft recovery, driver coaching) — while simultaneously facing higher regulatory and reputational risks after high‑profile privacy complaints and enforcement actions. (businesswire.com)
Why insurers are accelerating telematics
Insurers say telematics gives them more precise, behavior‑based measures of risk than traditional rating factors such as age, zip code or credit history. That granular insight can produce two business advantages: (1) more accurate pricing and therefore better loss ratios; and (2) a marketing lever to attract customers whose driving behavior warrants lower premiums and therefore strengthen “lower‑risk” books of business.
“Most of the largest insurers in the U.S. and Europe have introduced smartphone‑based solutions to supplement or replace dongles,” said Martin Cederqvist, senior analyst at Berg Insight, in the firm’s telematics market reports documenting the transition toward mobile apps and OEM data feeds. Berg estimates tens of millions of telematics policies in force across the two regions with continued five‑ to nine‑percent compound annual growth in forecast windows. (marketresearch.com)
Insurer tactics: segmentation, services and acquisitions
Carriers are pursuing different routes to bolster telematics programs. Some large incumbents expand proprietary smartphone apps and coach customers toward safer behavior; others buy or partner with specialist insurtechs and data vendors to gain ready‑built platforms and customer bases.
- In the U.K., Direct Line Group acquired pay‑by‑mile operator By Miles as part of a strategy to add mileage‑based and app‑driven propositions to its portfolio. Insurer groups across Europe — from UnipolSai and Generali in Italy to Admiral and Direct Line in Britain — have used acquisitions and partnerships to scale UBI offerings. (directlinegroup.co.uk)
- In the U.S., firms with long‑running telematics programs — such as Progressive’s Snapshot — report a growing majority of enrollments coming through mobile devices rather than plugged‑in dongles. “When given the choice, consumers opt for the mobile app,” Progressive CEO Tricia Griffith said on an earnings call, noting the company still values the car‑connected dongle for certain technical advantages but sees most new data coming from phones. (investing.com)
Market scale and forecasts
Independent research houses place the current global market in the tens of billions of dollars and project rapid growth. IMARC, ResearchAndMarkets and other research firms report market sizes and growth projections that vary by methodology but agree on pronounced expansion as telematics moves from niche to mainstream, with particularly strong growth expected in North America and Western Europe. Berg Insight and ResearchAndMarkets project double‑digit increases in telematics policies through the late 2020s in those markets. (imarcgroup.com)
A growing privacy and regulatory backlash
The industry’s data‑driven gains have been met by equally intense scrutiny. Privacy advocates, regulators and some lawmakers say telematics and third‑party data sharing can produce opaque outcomes — including unexpected premium hikes — and can reveal sensitive personal patterns such as visits to medical facilities or religious sites.
Federal and national enforcement actions crystallize the risk. The Federal Trade Commission (FTC) in the United States announced a high‑profile action against General Motors and its OnStar unit after reporting that GM shared precise geolocation and driving behavior data with data brokers and insurers, sometimes as frequently as every few seconds. FTC Chair Lina M. Khan said the agency’s action aims to stop what it described as unchecked surveillance and to require affirmative consent for the collection and sale of certain connected‑vehicle data. The order (announced and finalized across 2025–2026) restricts GM’s sharing of covered driving data and imposes long‑term consent and transparency requirements. (apnews.com)
Privacy advocates warn that telematics practice can outpace safe guardrails. The Electronic Frontier Foundation (EFF) and other civil‑liberties groups say location and detailed driver telemetry are highly sensitive and call for strict limits: opt‑in consent, data minimization, clear retention limits and the option to be insured without participating in telematics programs. “Vehicle data should not be used in ways people do not understand or know about,” the EFF wrote in guidance on mobility data, urging regulators to require privacy‑protective rules. (eff.org)
State and national policy responses are emerging
In the U.S., interest from state insurance regulators and legislatures has increased. The National Association of Insurance Commissioners (NAIC) maintains resources on telematics and usage‑based programs and many states have added transparency or use restrictions; as of early 2026, state legislatures continue introducing bills that would restrict insurers’ use of telematics in underwriting or mandate stronger disclosures. For example, a Maryland Senate bill introduced in February 2026 would limit how telematics data can be used to underwrite policies and would expand disclosure and oversight provisions. (content.naic.org)
In Europe, data‑protection regulators have emphasized that connected‑vehicle data is personal data under the General Data Protection Regulation (GDPR) and are developing guidance and consultation packages. The European Data Protection Board (EDPB), France’s CNIL and other national authorities have issued or updated guidance on connected vehicles and recommended privacy‑by‑design measures, limiting retention and insisting on transparency about what is collected, why and with what legal basis. Several national consultations in 2024–2025 press automakers and insurers to offer explicit consent options and to limit the sharing of location data. (mofo.com)
How the data flows — and where the risks lie
Telematics data can come from three main channels: smartphone apps installed by drivers; aftermarket dongles (plugged into the vehicle diagnostic port); and built‑in OEM telematics from the carmaker (OnStar, Toyota’s systems, Tesla, etc.). Third‑party data brokers and analytics vendors aggregate and repackage vehicle signals — mileage, hard braking, time of day, speed patterns, and in some cases precise location traces — into risk scores that insurers and reinsurers can buy. That marketplace creates technical and ethical challenges around consent, de‑identification and re‑use.
The New York Times’ reporting and subsequent enforcement actions documented cases where drivers alleged they had been enrolled in carmaker telematics programs without clear knowledge and later saw tougher insurance quotes after brokers and insurers accessed vehicle reports. Class actions and state attorney‑general investigations followed. Those episodes helped shift public and regulator attention toward the downstream uses of vehicle data. (insurancejournal.com)
Insurer defenses and consumer value propositions
Insurers say telematics can lower costs for both companies and safe drivers, improve road safety through coaching and emergency response, and reduce fraud. Firms cite internal analytics showing that telematics‑qualified drivers file fewer high‑severity claims and that real‑time feedback reduces risky events.
“Telematics enable us to better segment risk and engage customers who want to be rewarded for safer driving,” said a Progressive executive during recent investor discussions; Progressive and other major carriers note that mobile apps now offer a cheaper, faster enrollment path and let insurers provide services beyond price discounts, such as crash detection and claims‑fast‑tracking. (investing.com)
But insurers’ privacy practices vary. Consumer‑advocacy organizations and independent testing groups have flagged long retention periods, broad sharing clauses in policy documents and the potential for repurposing telematics records for marketing or claims‑verification in ways consumers did not anticipate. Consumer Reports and other watchdogs have urged clearer disclosures and tighter limits on retention and third‑party sales. (connectedcartrends.com)
Practical consequences for drivers
- Potential savings for safe drivers: studies and industry data suggest typical discounts ranging widely (often cited in the 5–25% range for many participants), though results are heterogeneous and depend on program design and individual driving patterns. Market‑wide averages mask large variation by geography, mileage and behavior. (persistencemarketresearch.com)
- Risk of surprise outcomes: drivers who drive in higher‑risk places or times (late nights, high‑speed corridors), have long commutes, or carry out certain patterns of trips may see less favorable outcomes — and, in some reported cases, unexpectedly higher quotes when insurers or brokers interpreted aggregated data as adding risk. Public cases involving OEM data sharing intensified those concerns. (carscoops.com)
- Practical privacy controls: advocacy groups and regulators recommend opt‑in enrollment, clear notice about what data is shared and for how long, an ability to access and correct data, and a non‑telematics rating option so drivers are not coerced to give up privacy to obtain coverage. EFF’s principles and national guidance stress data minimization and relatively short retention windows for precise geolocation data. (eff.org)
What comes next: balancing innovation and safeguards
Industry analysts and privacy experts agree on two simultaneous trends: mainstreaming of UBI as carriers scale app‑based models and embed telematics into broader customer services, and a hardening regulatory environment that will constrain how OEMs, brokers and insurers collect and sell telematics signals.
The FTC’s action against GM and the series of state‑level bills in the U.S., together with EDPB/CNIL guidance in Europe and vocal consumer advocates, are likely to push more explicit consent flows, stronger retention limits, and heightened auditing of telematics programs. At the same time, insurers will continue to argue that telematics improves fairness in pricing and creates safety benefits that benefit customers and communities.
“Telematics is a powerful underwriting tool, but it must be deployed with clear guardrails that protect consumer choice and privacy,” said an attorney at a consumer‑privacy organization. “Without robust consent and transparency, the risk is that these programs will breed distrust and regulatory backlash that slow their legitimate safety and pricing benefits.” (eff.org)
Bottom line
Telematics and usage‑based pricing are moving from experimentation to an expected component of the modern auto‑insurance stack in developed markets. The technology promises fairer pricing for many and operational advantages for insurers; it also amplifies tensions over surveillance, consent and data resale. How policymakers, regulators, automakers and insurers address consent, data minimization, retention and transparency in 2026 and beyond will determine whether UBI matures as a consumer‑friendly innovation or stumbles against privacy and equity concerns that have already triggered enforcement and legislative responses. (iotbusinessnews.com)
Reporting for this article drew on market research and industry forecasts from Berg Insight and ResearchAndMarkets, agency and enforcement coverage by The Associated Press and major technology and industry outlets, insurer filings and earning‑call transcripts, and commentary from privacy and consumer groups including the Electronic Frontier Foundation. (telematicswire.net)