Frost & Sullivan's Automotive & Transportation division finds that the US is one of the fastest growing markets for telematics-based insurance, in which 60% of the major insurance players currently offer a mileage-based or driving behaviour-related discounts to customers or a combination of both.

Ford and GM have offered mileage-based insurance discounts utilising their respective telematics infrastructure, Sync and OnStar, in the US since 2010. More recently, Citroen and Vauxhall have launched “pay how you drive” insurance programmes specifically targeted at young drivers in the UK.

‘The objective for all of these programmes are to decrease cost of ownership for a specific set of customers, as telematics-based insurance is not a one size fits all solution,’ said Frost & Sullivan’s telematics & infotainment program manager Praveen Chandrasekar. ‘This particularly will help attract first-time younger car buyers, for whom cost of ownership is a big deal.’

OEM involvement, though, in the telematics-based insurance space is currently at a basic level, as there is quite a bit of concern among some OEMs on certain issues, such as privacy and business models. Yet in the long-run, insurance is expected to be a key offer in a bundled service with telematic infrastructures, thus further boosting insurance-telematics popularity.

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