Once a novelty, telematics is now becoming a burgeoning force in auto insurance, a new report from Novarica finds.

Telematics, a portmanteau of telecommunications and informatics, refers to a group of technologies that afford insurers driving information directly from the insured’s vehicle. The popularity of services such as GM’s OnStar and shifting public notions of privacy, may make more motorists warm to telematics-based insurance. Indeed, the report, authored by Novarica Senior Researcher Steven Kaye, notes that 75% of respondents to a recent survey indicated that they would be willing to share driving data with their insurer in exchange for lower premiums.

“Initial barriers to wider adoption of telematics-based auto insurance included the expense of equipment, required modifications to policy administration, rating and billing systems, and privacy concerns,” according to the report. “However, dropping equipment costs and a focus on tracking other information besides location such as miles driven (thus allaying privacy concerns) are making wider adoption of telematics-based offerings more feasible. While Progressive is perhaps the best-known U.S. example of an insurer using telematics many other insurers are either conducting trials or providing offerings. AAA, Allstate, Erie Insurance, Esurance, Farmers Insurance, the Hartford, MetLife, State Farm, Travelers and Unigard are all conducting limited trials.”

Kaye enumerates a slew of positives for insurers that deploy telematics. “In addition to the obvious underwriting benefits of real-time data, insurers can also benefit from faster and less-expensive loss reporting, claims resolution and investigation and from the ability to enhance existing insurance products or even to develop new ones.”

What’s more, Kaye notes a growing number of vendors are offering support for telematics in their core system offering.

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Corrected December 3, 2010 at 12:44PM: yes