While discussing telematics and other forms of "big data" withPeter Marotta, enterprise data administrator for Verisk Analyticsat last week's IASA conference, he pointed out an unusual positionthat the insurance industry is in today.

"The technology [around telematics] is well ahead ofutilization," says Marotta.

In most cases—particularly for insurers—we end up waiting fortechnology to catch up to the needs of the industry, but that's notthe case with telematics.

There's a simple explanation for why insurers have yet toembrace the technology: The amount of data that telematics systemscollect is imposing for even the largest of insurance carriers.Finding ways to bring some structure to the data is just one of thereasons insurers have yet to make a telematics breakthrough.

But a breakthrough certainly is on the horizon. There are toomany underwriting advantages to be gained by insurers through theuse of telematics to give up on finding the right solution to this"big data" issue.

We recently ran an article about State Farm Insurance and theFord Motor Co. collaborating on a new program that brings together these twomajor players in the world of automobiles and personal autoinsurance. It's a step Marotta believes is the direction telematicsneeds to take to become an effective tool for insurers.

"The insurance companies and the automobile manufacturers needto create telematicsstandards," he says. "Both sides need to worktogether."

Not surprisingly, ACORD is working on thosestandards and in ablog posted earlier this year by Gregory Maciag, CEO of ACORD, hecalls for all sides to work together. Maciag cited the effortsbeing conducted in England to bring standards to telematics and points out that because ofthe technology's infancy in the U.S., car companies and insurerscan get a jump on solving long-term issues.

Another fear that both Marotta and Maciag expressed is thatinsurers may establish proprietarystandards for telematics data,which could be a setback, particularly for the midtier market thatdoesn't have the resources to develop the technology on itsown.

Progressive is the recognized leader in telematics at this pointand they are keeping a close eye on competitors using what theyfeel is proprietary technology. Most recently, Progressive filedpatent-infringement lawsuits against The Hartford and StateFarm.

None of us are going to lose any sleep over billion dollarcompanies battling in court, but we are all reminded of pastheadaches the industry has put up with because individual companiesare reluctant to participate in establishingstandards that theentire industry can share.

Every mid-tier insurer should be pushing forstandards aroundtelematics before they are forced to pay the ultimate price ofbeing behind the curve with telematics: adverse selection of theirpersonal auto products.