October 2020 – This report examines the current state of telematics in personal auto insurance, including insurer activity, adoption rates, common program features, an overview of the provider market, and the design of telematics-based insurance products.

Telematics has emerged as a significant segment of the personal and commercial automotive and fleet insurance markets. Overall adoption is still relatively low across the industry, but insurers are having notable successes, some with penetration rates of 30-35%. Insurers have also begun to expand beyond retention discounts to create telematics-backed policies that emphasize rewards, customer engagement, and family safety. Telematics won’t dominate the industry in the near term, but it is here to stay. Insurers should consider telematics strategically, whether or not they ultimately elect to create telematics-based insurance offerings.

Key Points and Findings

• Overall penetration is about 6-8% of insurers’ books, with some up to 35%. Telematics won’t become dominant in the near future, but some insurers are having substantial successes.
• Value-added services and user experience are becoming more important. Telematics offerings are increasingly seen as customer-engagement opportunities—which requires that insurers support them appropriately.
• Insurers should buy, not build, their telematics capabilities. The solution market is maturing, and insurers should leverage partners when developing their offerings or adding features.