By 2017, it's estimated that more than 60% of the world's vehicles will be connected, actively monitoring the safety and security of vehicles and drivers. In fact, Progressive, which launched the first telematics product in 1998, has reported that it accounted for more than $1 billion in premium revenue for usage-based insurance policies (i.e. paying according to how many miles you drive or how well you drive).

Progressive is forecasting that over 25% of the entire U.S. automotive-insurance premium revenue will be generated via telematics by 2020, representing more than $30 billion.

Whereas much of the development has been around usage-based systems, telematics devices are now far more detailed in the information they provide when it comes to the insured's driving behaviour including the time of day, travel, location, speed and acceleration.

In a way, this is risk that can be modelled to the infinite degree. Your insurer now knows everything about your driving habits. They're not relying on an actuary's interpretation of how a 35 year old with 15 years' experience might handle a six year old Porsche Boxster 3.4 S. Even though the ability to discriminate by gender when pricing an automotive policy has been ruled illegal, why should insurers be bothered? Not when they now have access to information that is far more insightful than the statistical broad brush of yesteryear.

Beyond automotive usage

The ability to then use telematics and profitably tap into a market where 92 percent of drivers are reported to believe that their premiums should largely be based on the way they drive should be very attractive.

Very exciting, but why stop at automotive when it comes to developing insurance policies that truly reflect the actual risk—not simply an actuary's perception of risk? The life sector for one could benefit. How about an app that measures your vital signs such as blood pressure, heart rate and overall physical health in real time and feeds information continually back to your insurer? The Quantified Self Movement is already pioneering the use and development of self-tracking tools that help people make sense of their personal data. Are you fitter than the average 40 year old? Then telematics could be a way for you to secure lower premiums.

Commercial lines such as property could also benefit. What about smart buildings that are able to relay information about their operation in real-time? If a window is left open overnight, perhaps that information could signal a security risk to the owner so it doesn't happen again. But premiums could also be adjusted to reflect the changing risk profile.

The insurance business really does have an opportunity to transform the way it does business from the pricing of risk right through to claims handling and day-to-day communication with its clients.

Of course, there is a price to pay. It was Greta Garbo who pleaded 'I want to be alone.' To that I say 'good luck' in an electronically connected world where your every move can be monitored and assessed. But if it leads to a more relevant insurance product and a cheaper one for many, then I'm sure it's a price that most will be willing to pay.