The ability of auto carriers to economically collect information about driver performance will be a key factor determining the fate of usage-based insurance programs, particularly for smaller companies looking to compete against the industry's data-rich giants.
Gathering telematic data for usage-based insurance (UBI) coverage has traditionally depended upon the willingness (and sometimes the ability) of policyholders to plug monitoring devices into their vehicle's on-board diagnostic system. Recently, more auto manufacturers have been incorporating telematic capabilities into their vehicles. At the moment, however, such systems lack standardization, and in any case it will likely take several years for this technology to be available to a meaningful percentage of drivers, given the pace of fleet turnover.
These factors make relying on devices installed in the vehicle itself a problematic option for UBI carriers, at least in the short run.
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