A series of events since the first of the year may offer insurers increased clarity and certainty should they choose to launch usage-based insurance programs. Those programs, also known as insurance telematics, use in-vehicle devices to monitor driving behavior moment-by-moment to rate risk, facilitate underwriting and offer insurance rates based on an individual's actual driving behavior. Insurance industry group ACORD (Association for Cooperative Operations Research and Development) in January published its open data standards for insurance telematics technology. And Progressive Insurance, the leader in the usage-based insurance market and an insurer that has established its own telematics data standards, has endured a series of setbacks in its efforts to delay or deter other insurers from launching usage-based insurance programs.

Insurance telematics presents an attractive opportunity for insurers in that it enables them to offer rates that are actuarially sound, accurate and profitable. Other potential benefits to insurers include attracting greater numbers of safer drivers based on the promise of meaningful discounts, as well as the opportunity to differentiate their products and services in a crowded and increasingly commoditized market. Those value-added products and services could be based on a combination of driving behavioral data, physical location and other characteristics communicated by the vehicle or derived from that data though algorithms. Global growth in telematics subscriptions is expected to increase 81 percent on a compound annual growth rate to 107 million users in 2018, up from 5.5 million at the end of 2013, according to "Usage Based Insurance and Safety Telematics Synergies," from ABI Research, which offers analysis and quantitative forecasting of trends in global connectivity and emerging technologies.

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