Insurers risk stalling the expansion of personalised pricing and usage-based insurance (UBI) in 2026 unless they address long-standing consumer concerns around data privacy and transparency, telematics provider IMS has warned, as the UK motor market continues to grapple with affordability pressures and thin margins.
While telematics-led pricing has been positioned as a tool to improve risk selection and reduce loss ratios, uptake in the UK remains relatively low compared with some European markets. IMS research suggested this disconnect is less about technology readiness and more about trust, with many motorists unconvinced that the value exchange between lower premiums and data sharing works in their favour.
According to the results of a survey of over 5,000 drivers across five international markets, IMS found that, in the UK, 72% of motorists said they were open to the idea of usage-based insurance but more than half were reluctant with sharing driving data due to concerns over misuse, security breaches, as well as a lack of clarity on how the information is collected, stored and shared.
"The industry is sitting on a wealth of data from the last decade that proves the value of risk-predictive driving scores derived from telematics data, and all the elements are there for UBI and personalised pricing to completely rewrite how motor insurance works for customers," said Andrew Brown-Allan, EVP Growth (EMEA) at IMS. He added that while personalised pricing is increasingly central to insurers' strategies, explanations around data governance are often treated as a compliance exercise rather than a core part of the product proposition.
The survey also found that 62% of UK respondents are concerned about sharing personal driving data and only 32% are comfortable with insurers collecting telematics information. As a result, just 19% of drivers have ever taken out a UBI policy, despite the potential for more accurate pricing and, in some cases, annual savings exceeding £1,100.
The findings come at a time when UK motor insurers are under sustained pressure from claims inflation, repair costs and regulatory scrutiny over pricing practices. With the Financial Conduct Authority continuing to emphasise fair value and customer understanding, IMS argued that opaque data practices could become a commercial, as well as regulatory constraint on UBI growth.
A new road safety strategy
IMS’s warning also follows the government’s launch of its new road safety strategy, which aims to cut road deaths and serious injuries by 65% by 2035. While the strategy focuses on enforcement and behavioural change, Brown-Allan said it underplays the role insurers and telematics can play in improving driving standards and reducing claims frequency.
IMS data indicated that between 2018 and 2021, the number of 17- to 19-year-olds killed or seriously injured in road traffic accidents fell by 37%, compared with a slight increase among motorists overall. The provider said this trend closely aligns with higher UBI adoption among younger drivers, where smartphone-based telematics has been used both as a pricing mechanism and a behavioural tool.
Brown-Allan said continued progress will require government intervention, including incentives such as reducing insurance premium tax for telematics-based policies aimed at younger drivers, as well as clearer encouragement for insurers to market these products more proactively.
Distribution challenges
On the distribution front, more than half of the respondents were unfamiliar with usage-based insurance products. Only 45% of UK drivers had heard of UBI, and two-thirds said they were not offered a usage-based option at their last renewal. IMS said this suggests that insurers and brokers are not consistently presenting telematics as a mainstream alternative, despite its potential to support retention and risk management.
For insurers, the findings highlighted the issue of personalisation becoming more data-intensive. As customers become more selective about how their information is used, and as regulators increase scrutiny of data practices, the ability to clearly explain and justify data collection may be a strategic issue that insurers would have to face.
“Insurers must treat data access as a privilege, not a given,” Brown-Allan said. “Without [transparency, security and real customer control], UBI risks remaining a niche proposition despite its economic and safety benefits."
