Smartphones have the ability to capture and transmit much of thesame data of onboard devices installed in vehicles. Allstate—whichbegan offering a smartphone option for its Drivewise usage-basedinsurance (UBI) program in February 2014—believes the devicespresent a viable option for UBI.

“After doing a lot of testing with our employee group, as wellas customers, we are comfortable with where we are at and with thedata we are receiving,” says Allstate spokesperson JustinHerndon.

However, across the U.S. insurance industry, smartphone use hasgenerally been limited to driver-awareness services—such as parentsmonitoring children's driving behavior—rather than policyrating.

Progressive continues to look at ways to use smartphones in itsUBI program, but has run up against several obstacles. “If we couldgive customers an option to use their phone to send us data, thatwould be easier for them, but it's actually technically prettychallenging for us,” says David Pratt, general manager of UBI atProgressive. “One of the variables in our discount calculation ishow often you hit the brakes hard, and it's more difficult to getthat data via phone versus the OBD device. We also need to be surethe data is accurate and relevant, such as distinguishing betweenwhen you're a passenger and driver.”

Smartphone data may also not correlate easily to the way U.S.insurers rate auto policies. “It's the car that is being insured,and it's the car that needs to be connected,” says Nino Tarantino,CEO of Octo Telematics North America. “The cellphone is connectedto the driver. It can't tell you if someone different is drivingthe insured vehicle. You also lose a lot of data when you go to anon-OBD device.”

Part of that loss comes from the fact that there's no way toknow if data is complete. “Customers can simply turn their phonesoff,” says Monique C Hesseling, partner in insurance consulting,Strategy Meets Action. “However, I do foresee an increase intelematics via mobile devices, particularly among the youngerdriver segment, because it's much cheaper for insurers than using aplug-in, black-box device.”