Telematics in Insurance: A Growing Trend with Complex Challenges
Telematics-based insurance has been at the forefront of innovation in recent years. Harnessing GPS and real-time data, telematics enables insurers to adjust premiums based on driving behaviors, offering personalized pricing models. The concept has gained traction as consumers seek fairer, usage-based policies while insurers explore ways to minimize risk and incentivize safe driving.
USAA, a major player in the insurance industry, ventured into telematics by acquiring Noblr in 2021. Noblr’s core product revolved around the “Pay as You Drive” model, where customers’ premiums reflected individual driving patterns. Over time, Noblr expanded from its initial five states to fifteen, signaling confidence in its approach. Yet, just a few years later, the program is being discontinued as USAA consolidates its telematics offerings under the broader “Usage-Based Program.”
Despite telematics being heralded as a major trend in insurance, this development indicates that success in this space is far from guaranteed. What went wrong, and what does this reveal about the implementation of telematics across the industry? 
Why Did Noblr’s “Pay as You Drive” Program Fall Short?
While telematics offers considerable potential, its success hinges on execution. Noblr faced several barriers that may have contributed to its demise. Chief among them were system incompatibilities with USAA, making seamless integration and transitions for policyholders unfeasible. Customers needed to reapply for coverage, a challenging process that risked alienating existing clients.
The program’s limited market penetration may have also been a factor. Despite a presence across 15 states by 2024, Noblr had only 6,163 active policies in total, with relatively modest annual premium volumes, such as $1.57 million in Virginia and $1.5 million in Colorado. These numbers suggest the company struggled to achieve the scale necessary to make the program sustainable.
Another issue could lie with consumer education and adoption. The telematics approach requires customers to understand and trust the data collection process, which, for some, might feel intrusive. If messaging around these benefits is unclear, it can hinder uptake.
Finally, the broader insurance market presents its own challenges. Rising costs, risks from climate events, and economic inflation strain insurers’ resources. Some carriers, such as those operating in wildfire-heavy areas of California, have had to raise premiums significantly to offset exposure. For context, USAA implemented rate increases averaging 25.9% for homeowners in California in December 2024. It is possible that operating costs and risk-modeling complexities across auto insurance further compounded difficulties for Noblr.
Insights from USAA Insurance and a Broader Business Strategy
USAA’s decision about Noblr fits into a pattern of strategic pivots and market adaptations. Beyond telematics, the company has faced significant pressures, particularly in states like California, where wildfire risks have upended traditional risk models. Regulatory changes and higher environmental risks prompted USAA and its subsidiaries to implement sharply higher rates, with some policyholders encountering a 48.5% increase in premiums.
These adjustments underscore a larger trend shaping the industry. Insurers are dealing with the dual priorities of profitability and consumer fairness in high-risk regions. While telematics theoretically offers a data-driven way to balance these priorities, it does not eliminate the rising cost of claims associated with natural disasters or economic uncertainty.
Learning from the Insurance Trends Shaping 2025
Despite Noblr’s challenges, telematics remains a promising pillar of innovation within the insurance sector. According to a recent industry analysis, personalized insurance is gaining momentum, evolving beyond basic usage-based policies. For instance, wearables, IoT-connected devices, and AI technologies now enable insurers to monitor risks in real-time, whether it’s tracking driver behaviors, water leakage prevention within buildings, or monitoring construction equipment.
Automation and AI are becoming essential tools, offering insurers new ways to predict risks and streamline claims processes. Companies are increasingly embedding machine learning algorithms into their operations, reducing fraud and administrative burdens while ensuring faster, more accurate claims payouts.
However, these technologies need to be thoughtfully integrated into user-friendly ecosystems. Telematics adoption, for example, will depend on consumer buy-in and robust privacy assurances, alongside insurer investments in scalable, compatible infrastructures. Had Noblr’s systems aligned more closely with USAA’s or addressed consumer hesitations effectively, the outcome could have been different.
How Can Telematics Shape Insurance Today and in the Future?
Beyond auto insurance, telematics and data-driven technologies offer profound opportunities across various insurance lines. For property insurance, IoT sensors can monitor building systems, detecting water leaks or temperature anomalies to prevent costly damages. Similarly, construction insurers can use telematics to track machinery usage and extend coverage tailored to a job site’s unique risks.
For these tools to deliver their full potential, the key lies in collaboration. Insurers must partner with technology providers and policyholders to build systems that seamlessly connect data collection with actionable insights. Organizations can encourage adoption by bundling telematics-based offerings with proactive risk management programs.
While Noblr’s discontinuation is a cautionary tale, it is far from an indictment of telematics as a concept. Instead, it reflects the need for insurers to address structural challenges and refine their strategies. By leveraging real-time data, scaling compatible systems, and prioritizing usability, telematics can reshape insurance for the better—adding value for companies and customers alike.
Looking ahead, the next phase of innovation will likely see insurers leaning further into holistic risk prevention, combining automation with predictive technologies to shift the industry’s emphasis from reactive payouts to proactive protections.