Telematics Takes Centre Stage. When Your Driving App Can Raise Your Rates
Imagine your next auto insurance bill reflecting not just your age or postal code, but the speed you drove through a school zone on a Wednesday morning or the number of kilometres you racked up after midnight. Usage‑based insurance (UBI), also known as telematics, has been pitched to Ontarians as a way to save money if they drive safely and infrequently. Until recently, there was a catch: insurers could only lower your premium, not raise it. That changed in late 2021, and the Financial Services Regulatory Authority of Ontario (FSRA) has since clarified that insurers may now apply surcharges for risky driving behaviour, provided they obtain regulatory.
For consumers, this marks a significant shift in how auto insurance is priced. This article unpacks what telematics is, why FSRA changed its rules, and how to decide if a telematics program is right for you.
What is Usage‑Based Insurance?
Telematics programs use smartphone apps or plug‑in devices to collect data such as speed, acceleration, hard braking, cornering, distance travelled and time of. Some apps also monitor distracted driving by detecting phone use while the vehicle is moving. Insurers then analyze this data to assign a risk profile. Under discount‑only programs, good drivers could earn premium reductions—up to 30% in some cases—while poor driving habits would simply reduce the discount. Under the new rules, the same data can also be used to apply surcharges.
Common UBI models include:
Pay‑How‑You‑Drive (e.g., TD MyAdvantage, Intact my Drive, Travelers IntelliDrive): Drivers receive an immediate sign‑up discount and additional savings for consistently safe driving, but riskier behaviour can now reduce or eliminate those.
Pay‑Per‑Kilometre (e.g., CAA MyPace): Ideal for low‑mileage drivers; crossing a mileage threshold used to simply cap the discount, but surcharges for higher mileage are now.
Why Did FSRA Change the Rules?
FSRA’s rationale is grounded in fairness and market innovation. The regulator argues that aligning premiums with actual risk encourages safer driving and provides more accurate. Good drivers still stand to benefit, while those who frequently speed, brake harshly or drive at high‑risk times may pay more.
The move also reflects broader pressure to address Ontario’s escalating auto insurance costs. Despite a 26% drop in vehicle thefts in the first half of 2025, premiums remain high due to the cumulative impact of theft claims (up 115% over the past decade) and repair. FSRA hopes that more granular risk assessment will help stabilize premiums for safer drivers.
Benefits of Telematics
Potential Savings: Some drivers report discounts of up to 50% when they maintain safe habitsfmlaw.ca.
Personalized Pricing: Your rate reflects how you actually drive rather than broad demographic factors. This can benefit young or urban drivers who historically face higher premiums.
Safer Roads: Incentivizing good behaviour—like avoiding late‑night driving or eliminating phone use—could reduce accidents and claims.
Data‑Driven Claims: Telematics data can help settle claims quickly by verifying the circumstances of an accident.
Risks and Considerations
Premium Increases: With surcharges now on the table, there’s a real possibility your rates will rise if you frequently speed, drive long distances or exhibit risky habitsfmlaw.ca.
Privacy Concerns: Telematics apps collect sensitive data and may run continuouslyfmlaw.ca. Insurers must comply with privacy laws such as the Personal Information Protection and Electronic Documents Act (PIPEDA)fmlaw.ca, but you should still review consent agreements carefully.
Technological Dependence: Most programs require a smartphone app to be active at all times. If your phone battery dies or you forget to enable location services, it could impact your data and discounts.
Behavioural Impact: Constant monitoring may create anxiety or encourage some drivers to change routes or driving times in ways that are inconvenient or even unsafe.
Tips for Drivers Considering Telematics
Assess Your Driving Habits: Do you often drive late at night, accelerate quickly or travel long distances? If so, a traditional policy may be safer.
Read the Fine Print: Understand exactly what data is collected, how long it’s retained and whether surcharges apply.
Start with a Pilot Program: Many insurers offer trial periods. Monitor how your driving scores affect your rate before committing.
Protect Your Data: Ensure the app comes from a reputable insurer and that your phone’s security settings are up to date.
Maintain Good Habits: Regardless of telematics, safe driving reduces wear and tear, accident risk and fuel costs. Use the feedback from apps to improve.
The Bigger Picture
Telematics is part of a broader modernization of auto insurance. FSRA is also introducing a Fraud Reporting Service rule that requires insurers to submit detailed fraud data, aiming to reduce system costs and stabilize premiums. Meanwhile, the Insurance Bureau of Canada notes that auto theft still costs every driver in Ontario about $130 per, even after recent theft declines. Together, these initiatives signal a shift toward data‑driven pricing and systemic reform.
Usage‑based insurance offers promise and peril. By putting your driving habits under the microscope, telematics can deliver personalized savings and encourage safer roads. Yet, the end of the discount‑only era means drivers must weigh potential surcharges and privacy trade‑offs. As Ontario’s insurance regulator continues to embrace data‑centric policies, consumers who stay informed and adapt their habits will be best positioned to benefit.
For personalized guidance on whether a telematics program fits your risk profile or how to protect your privacy while saving on premiums, the Why Worry Risk Management team is here to help.