Many car insurers have struggled for years to get policyholders to adopt telematics, a way to collect information about mileage and driving habits directly from the vehicle. General Motors Co. ’s new deal to market car insurance based on data from onboard computers advances insurers’ efforts to size up risk.
Through cellphone apps and dashboard dongles, insurers have been hauling in a lot of data and offering discounts to the safest drivers, but many policyholders think the hassles outweigh the savings.
Industrywide fewer than about a tenth of policyholders are going the so-called usage-based insurance route, though the percentages are higher at insurers that have worked hard at it, according to consultants.
Analysts say the breakthrough in the GM partnership, which is with a unit of American Family Insurance, is that the hassles largely go away for policyholders. Once policyholders consent, insurers can access their data without the use of dongles or cellphone apps. The partnership follows an arrangement Ford Motor Co. and Lincoln Motor Co. struck with Nationwide Mutual Insurance Co. that was detailed in February and also involves “connected car” data.
“This is the leading edge of what within a few years will be all major automobile manufacturers having similar arrangements with insurers,” said Robert Hartwig, a professor of insurance at the University of South Carolina’s Darla Moore School of Business.