The number of live telematic motor insurance policies in the UK increased by around 60% between 2012 and 2013, according to research from the British Insurance Brokers Association
BIBA estimated that the uptake of the behaviour-based motor insurance telematics boxes and smart phone apps rose by 116,000 over the period.
In 2013, there were 296,000 live policies, up from 180,000 in 2012. The number of telematic providers also increased from 10 in 2012 to 15 in 2013.
Speaking to The Actuary, Graeme Trudgill, BIBA's executive director, said: 'Overall there are over 30 million vehicles on the road and so far we've only got about 300,000 telematic policies so in the ocean of motor insurance [this is a small drop] in the water.
'However, it is growing year-on-year. We've seen 116,000 more since we last took a look in the summer of 2012. We've got more and more brands now coming out and we have software houses using it and so many more brokers can plug into it as well. So I think it's actually now starting to snowball and take some effect.'
BIBA said that the behaviour based policy could offer savings on motor insurance of around 25% with some young drivers being able to save up to £1,000 at the top end.
Commenting on the findings, Jonathan Hewett, chief marketing officer at Octo Telematics told The Actuary: 'Telematics is never going to be for everyone, but consumers are increasingly turning to it as a performance-enabling technology and we expect this trend to accelerate over the medium-term.'
Hewett also said that telematics policies were providing huge benefits to the insurance market.
'It enables more accurate pricing of risk and streamlines the crash management process which in turn reduces claim times, costs as well as dramatically reducing fraudulent claims. It will also allow renewal structures to be more transparent and to give customers a real understanding of how safe driving habits translate directly into lower premiums.'
But Hewett noted that although the current rate of adoption is encouraging, 'this is really just the tip of the iceberg.'
'The challenge is, and will continue to be, how to convert the huge volumes of data generated in to understanding of behavioural patterns and actionable insights as to how the associated risks can be managed; this is a very exciting time but we, and the industry still have a long way to go.'
Agreeing that there is 'definitely an upward trend' in the popularity of telematics, Neil Chapman, senior consultant at Towers Watson, told The Actuary: 'We see telematics as a key item on companies' agenda for 2014 and expect the growth in polices to continue.'
He noted that the implementation of the EU Gender Directive, which prohibited insurers from basing prices on gender, could have been the factor in the increase in 2013.