Connected Cars Could Finally Take Usage-Based Insurance Mainstream

This article is by Warren Carley, Principal, Connected Vehicles-Telematics, Europe, at LexisNexis Risk Solutions

For years, usage-based insurance (UBI) has been one of the most promising innovations in motor insurance. Despite this potential, adoption has largely remained limited to specific segments of the market. Today, however, the rapid growth of connected vehicles across Europe i, combined with the emergence of source-agnostic UBI scoring methodologies, is creating conditions that could allow UBI to become mainstream.

Currently, most UBI programmes rely on aftermarket telematics devices fitted into vehicles. These solutions are often designed for niche markets and/or frequently targeted at younger or less experienced drivers. While effective in those segments, this approach has limited broader market adoption and reinforced the perception that telematics is primarily relevant to higher-risk drivers.

Connected vehicles have the potential to change this dynamic. When data originates directly from the vehicle, if insurers have a way to access insights into driving behaviour without requiring additional hardware or installation, the scalability of UBI and broadens its potential appeal across the wider U.K. and E.U. motor insurance markets.

Importantly, behavioural feedback models in motor insurance have already demonstrated their ability to influence driving outcomes. Overtime, road traffic incidents involving younger drivers have declined more rapidly than those involving other age groups ii. In fleet environments, telematics has delivered similarly encouraging results iii.

These improvements illustrate the fundamental value of behavioural insight. When drivers receive feedback on how their actions influence risk, many respond by adjusting their habits.

Despite the promise of connected vehicles, data consistency remains a major barrier. The automotive ecosystem is highly diverse worldwide, with different vehicle manufacturers, models and onboard technologies producing telematics data in varying formats.

This lack of standardisation of telematics data outside of an insurer’s existing program or for those with no program at all has limited the U.K. insurance industry’s ability to scale telematics-driven models effectively. While established UBI providers may already normalise data for participating customers, achieving comparable insights across OEM sources at scale remains difficult. Without a consistent framework for interpreting driving data and a delivery system for that data, the cost and complexity of managing data can quickly outweigh the potential benefits.

To address this challenge, the industry is increasingly focused on translating raw telematics data into consistent behavioural scores and attributes independent of any given insurer telematics program Metrics such as acceleration patterns, braking behaviour, speed, mileage and time of travel can be analysed to produce driving scores that support more accurate risk assessment.

Crucially, modern approaches also recognise the importance of consumer trust. Many scoring methodologies can operate without collecting location data, allowing driving behaviour to be evaluated while preserving user anonymity and control over personal information.

This balance between insight and privacy will be critical in encouraging drivers to engage further with telematics-based driving behaviour-based insurance models.

Ultimately, the growing presence of connected vehicles represents a significant opportunity for the U.K. motor insurance industry. If the technical, data and delivery challenges can be addressed at scale, behavioural insights could enable more personalized pricing, support safer driving and improve transparency for consumers.

At a time when affordability is a growing concern for motorists, models that more accurately reflect real-world risk could play an important role in shaping the future of motor insurance.

i https://www.gminsights.com/industry-analysis/europe-connected-car-market

ii https://www.gov.uk/government/statistics/reported-road-casualties-great-britain-older-and-younger-driver-factsheets-2022/reported-road-casualties-in-great-britain-younger-driver-factsheet-2022

iii https://iloveclaims.com/previous_events/exclusive-motor-claims-conference-2025