5 reasons to embrace telematics for the connected car: What insurers need to know

In the early 1990’s, credit-based insurance scoring caused a revolution in the insurance industry, as insurance companies used certain elements of a person’s credit history along with many other factors, to predict how likely that consumer was to have an insurance loss. Research showed that there was a high correlation.

Companies that adopted this capability in their rating plans were able to gain competitive advantage, while those that did not, suffered through adverse selection and either went through consolidation or went out of business. Today, 95% of auto insurers use in it in states where it’s a legally allowed underwriting or risk classification factor.