Update: 4.09.2026

Imagine a world where your client’s insurance policy isn’t based on averages and assumptions but on their actual habits. That’s exactly what telematics and connected data bring to the table. Whether one’s behind the wheel or tracking fitness goals, smart sensors and AI-driven analytics are shaping a new era of personalised insurance. But how does it all work? And what’s in it for insurers and policyholders? Let’s dive into the world of telematics and connected driving to find out.

Acknowledgement: This article draws on valuable insights from Artificient Mobility Intelligence, a company that knows connected driving inside and out. In our next instalment, we’ll take a deeper dive into their work and how they’re partnering with us at Shaped Thoughts to push telematics-driven insurance forward. More on that soon!

Understanding Connected Data

First things first. What’s telematics and connected driving?

What is telematics?

Telematics combines telecommunications and informatics to collect, transmit and analyse data from remote devices. In insurance, the term is most commonly associated with vehicle data and driving behaviour.

A telematics system can collect information such as vehicle location, mileage, speed, acceleration, braking and cornering. Depending on the technology, it may also capture information about crashes, vehicle condition or other events.

Software-based telematics integrated into a mobile phone uses sophisticated built-in motion and environmental sensors to capture even more events with very high precision.

Key aspects of telematics include the following:

• Data collection: Sensors and GPS monitor a vehicle’s whereabouts, speed, acceleration, and braking, among other metrics.
• Data transmission: This information is sent to a central server with the use of wireless mobile networks like 4G or 5G.
• Data analysis: Data analysis reveals insights into driving behaviour, fuel usage, or the car’s condition but can also be used to detect threats.

Telematics powers connected driving that enables vehicles to communicate with each other, traffic systems, and even cloud-based services. This connected vehicle technology uses built-in internet connectivity, sensors, and communication systems to share real-time data, with features like collision warnings and smarter traffic flow, making the roads safer and driving more efficient.

Telematics in Insurance

Telematics gives insurers access to information generated during real-world use rather than relying entirely on information available when a policy is purchased.

That does not automatically mean that every piece of telematics data should be used for pricing. Depending on the product, the same data can support underwriting, claims, assistance, fraud detection, risk prevention or customer engagement.

Motor insurance remains the most established application. EIOPA’s research found that telematics-based products were more common in motor insurance than in household or health insurance, although connected-device use has been explored across all three areas.

Motor Insurance

In the case of telematics in motor insurance, sometimes referred to as black box insurance, this tech changes the way risk assessment is done. Instead of relying solely on demographics and vehicle characteristics, insurers can gather critical insights, such as speed, acceleration, braking patterns, and driving times.

How to collect telematics data for the purpose of car insurance in the first place? There are a few ways. Some insurers use plug-in devices or smartphone apps, while many modern cars already have telematics systems built in. With connected driving becoming the norm, leveraging this data isn’t just an extra perk anymore—it’s a must-have for insurance companies who want to keep their offerings competitive.

Here are some of the key technologies behind telematics and connected driving solutions that come in handy in auto insurance:

• Hardware like black boxes and tags—These devices have been around for years, providing insurers with reliable data on driving habits.
• Smartphone apps—A convenient way to collect data while also engaging users with feedback and insights.
• AI-powered analytics—Enables predictive modelling, helping insurers assess risk more accurately.
• Video telematics—Provides a fuller picture of incidents by merging real-time footage with driving data.
• IoT integration—Connects multiple data sources for a comprehensive view of risk.
• GPS tracking—Logs routes and locations to help with claims and driver assessments.
• Sensors and data collection—Capture real-time inputs on speed, impact, and environmental factors.
• Wireless communication—Ensures smooth data sharing between vehicles, insurers, and cloud platforms.
• Cloud-based platforms—Store, process, and analyse telematics data for real-time decision-making.

Usage-Based Insurance (UBI)

Telematics has introduced Usage-Based Insurance (UBI), where premiums are directly determined by actual individual driving habits. For instance, drivers who are more cautious and drive safely are more likely to get lower premiums. In addition, insurers can provide so-called “pay-as-you-drive” plans based on mileage or driving style.

In a nutshell, UBI allows insurers to:

• evaluate risk more accurately
• offer personalised pricing
• reward safe driving behaviours

Crash Detection and Management

Telematics significantly changes things in crash detection and management. This technology enables automatic crash detection and the First Notice of Loss (FNOL). As a result, policyholders can get immediate assistance when they need it most. It also supports precise accident reconstruction, giving a clear picture of what happened during a collision.

Plus, with objective data collection, telematics helps prevent fraud, offering insurers a reliable way to validate claims and protect against false reports. From a customer perspective, telematics can significantly improve safety by instantly notifying relatives or assistants about detected crashes or other accidents.

However, telematics does not automatically make insurance fairer or cheaper for everyone. The value of a UBI product depends on the quality of the data, how the insurer uses it, and how the resulting risk model affects different groups of customers. Privacy and data-use questions are also an important part of the product design. EIOPA has specifically highlighted both the potential benefits and the risks associated with increasingly granular behavioural data.

Commercial Truck Insurance

Telematics has made a big impact on the commercial trucking industry by giving fleet managers detailed insights into vehicle performance, driver habits, and cargo conditions. It also allows for real-time vehicle health monitoring, maintenance tracking, as well as route optimisation. This level of precision improves risk assessment, helps reduce accidents and breakdowns, and enables insurance policies that are tailored to the actual risks of day-to-day operations.

Depending on the solution, data can cover:

• vehicle location and routes
• mileage and driving patterns
• harsh braking and acceleration
• vehicle condition
• maintenance events
• driver behaviour
• fuel consumption
• cargo or environmental conditions

This information can support risk assessment and loss prevention, but it can also connect insurance more closely to day-to-day fleet operations.

For example, telematics data can help identify risky driving patterns, highlight vehicles that may require maintenance, or provide evidence after an incident.

For commercial insurers, the opportunity is therefore broader than simply adjusting premiums. Telematics can become part of a risk management and claims ecosystem.

Property insurance

Connected sensors can also provide insurers with information about risks inside a property.

Smart-home devices can detect events such as water leaks, temperature changes, smoke or other potentially damaging conditions. When the right sensor detects a problem early enough, the insurer or policyholder may be able to intervene before a small incident becomes a major claim.

This makes connected data particularly interesting for prevention and mitigation.

The role of the insurer can shift from responding to damage after it happens to helping customers reduce the likelihood or severity of a loss in the first place.

EIOPA’s research confirms that connected-device products exist in household insurance, although adoption has historically been lower than in motor insurance.

Health insurance

What about health insurance? Does telematics come in handy there, too? Of course, it does.

For health coverage, wearables like fitness trackers give insurers a deeper look into a person’s lifestyle and wellness. Equipped with this data, companies can offer personalised premiums that reflect actual health habits, motivating people to live more active and healthier lives.

However, it is important not to reduce the role of this data to personalised premiums. Telematics and connected devices can also support wellness programmes, prevention, recommendations and other services.

EIOPA has noted that insurers may use data from connected devices to provide more tailored health-related services without necessarily using it directly for pricing.

This distinction matters. The same underlying technology can support very different insurance propositions depending on the business objective and the regulatory context.

This technology can be used in the same manner for pet insurance.

Benefits of Telematics for Insurers and Policyholders

Based on what we’ve covered so far, we can put together the benefits that telematics have for both insurers and policyholders. What are they? See for yourself:

Benefits for insurance companies

• Transition to data-driven operations
• Lower costs by cutting out the need for hardware deliveries and maintenance.
• Access to valuable, real-time data points
• Enhanced ability to offer personalised insurance products
• Improved risk assessment and pricing accuracy
• Reduced claims fraud with accurate driving data
• Potential for new revenue streams through innovative insurance products
• Fast, accurate and efficient FNOL leveraging fully digitalised claim-detection and reporting solutions

Benefits for policyholders

• Personalised insurance products tailored to individual needs
• Greater transparency in how premiums are calculated
• Improved customer satisfaction and engagement
• Ability to reduce insurance premiums through good behaviours (e.g. safe driving practices, healthy lifestyle choices)
• Incentives for healthy living
• Increased awareness of driving and lifestyle habits
• Clear environmental benefits by promoting safer and more sustainable driving habits.
• Tons of time, stress and energy saved thanks to fully digitalised and automated accident-detection and reporting tools

There are also trade-offs. Connected insurance requires customers to share data, and insurers need to be clear about what they collect, why they collect it and how it is used. Data quality matters too: inaccurate or incomplete signals can affect the conclusions drawn from telematics data.

Summary

From revolutionising motor insurance to transforming health and property coverage, telematics is reshaping the insurance industry in ways we couldn’t have imagined a decade ago. It’s a win-win: insurers gain precise risk assessment tools, while policyholders get fairer pricing and personalised experiences. As connected data continues, the question is no longer if insurers should adopt telematics, but how quickly they can integrate it to drive real business value.

There’s more to come!

In the next article in this series, you’ll discover how Artificient’s connected mobility solutions and our insurance expertise are transforming the industry.

Stay tuned!