Turning raw driving data into actionable insights is a major challenge facing carriers trying to turn the corner and write usage-based auto coverage profitably. So how might insurers crack the code with telematics?

Carriers writing usage-based insurance (UBI) are looking to base their underwriting and pricing decisions at least in part on direct experiential data culled from actual driving behavior. The trick, of course, will be determining exactly how telematics data points—alone and in tandem with other usage factors—might translate into a more precise predictor of risk.

Insurers will have to take into account what happened during a driver's trip, including event-related data (location, time of day, miles driven, weather conditions, etc.) and behavior-related information (how they drive—braking, acceleration, speed, turning, etc.). They then must analyze that data to generate correlations to the potential for an insured loss.