Transforming auto insurance territorial pricing with driving behavior data

Key takeaways

Traditional territorial pricing is limited by sparse, outdated data and regulatory constraints.
Driving behavior data can enable real-time, granular risk segmentation and more accurate pricing.
Arity’s data covers 15% of U.S. drivers and 96% of populated zip codes, with over 2 trillion miles analyzed.
Case study: Quincy Mutual improved segmentation, credibility, and identified emerging risks using driving data.
Integrating driving behavior data streamlines actuarial justification and supports competitive, compliant pricing.

Introduction

Territory remains one of the most established and powerful rating variables in auto insurance. Many carriers rely on territorial factors, making the location of insureds a cornerstone of pricing strategies. Yet, despite its ubiquity, territorial ratemaking is often seen as a stable and unchanging field, one that doesn’t need to evolve. However, innovation and new data sources are reshaping territorial pricing for the modern era.

Understanding territorial ratemaking

What is territorial ratemaking?

Territorial ratemaking, or territorial pricing, refers to the practice of using a policyholder’s location as a key factor in determining auto insurance premiums. To account for future losses and claims, insurers use a variety of risk proxies such as age, gender, credit score, and, crucially, location to estimate risk. Where a person lives and drives directly influences both the frequency and severity of potential claims.

How territory impacts insurance pricing

Insurers categorize geographic areas into territories, each with its own risk profile. Factors such as historical claim losses, traffic density, and weather patterns inform these categorizations. The result is a rating table that assigns a territory factor to each area, allowing insurers to adjust premiums based on where a customer lives. Traditionally, higher claim losses in a territory lead to higher premiums for its residents.

Geosight helps insurers improve territorial ratemaking

Geosight ℠ from Arity, a mobility data and analytics company, gives insurers updated, anonymized driving data to help improve territorial pricing accuracy. It delivers regularly updated, aggregated, and anonymized driving behavior data at the ZIP-code level, derived from 15% of the U.S. driving population — so that you can rate territory with more precision, speed, and confidence.

Limitations and challenges of traditional territorial ratemaking

Data sparsity and credibility issues

Challenge: When there isn’t enough claims data, especially for small areas like zip codes, auto insurers struggle with traditional territory-based pricing. It’s hard to accurately predict risk without this data, making your pricing less reliable.
Solution: Geosight fills these data gaps using behavior-based indicators that are grouped and anonymized by location. This gives you better information to set prices with confidence.

Reliance on third-party data

Challenge: Insurers often use external data to fill gaps, but this data typically comes from surveys or estimates, not actual driving behavior. It’s also updated infrequently, so it can quickly become outdated when driving patterns change suddenly, like they did during COVID-19.
Solution: Geosight uses current, near real-time driving data to help you spot emerging risks early. By identifying trends in driving behavior as they happen, you can adjust rates faster and more accurately — before these changes show up in your claims data.

Regulatory constraints

Challenge: State regulations make territorial pricing more complex. Insurers must follow specific rules about how data can be collected and used, making it harder to refine rates by location.
Solution: Geosight data has proven regulatory success. One carrier used it to revise and gain approval for rates in Massachusetts — one of the toughest states for filings. Additionally, Drivesight (a data component of Geosight) is already filed and approved in 48 states and Washington, D.C.

The power of driving behavior data

New data opportunities

Driving behavior data can be a game-changer for territorial ratemaking. For the first time, carriers can access granular, real-time data that reflects how people actually drive in specific territories. This can open the door to more accurate and dynamic pricing models.

Case study: Quincy Mutual

Quincy Mutual, a regional carrier operating in Massachusetts and New England, faced typical challenges: limited internal data, uneven agent distribution, and sparse exposures. “They weren’t looking for something that was an extrapolation of data or a forecasted number or a modeled number. This had to be on-the-ground measurements that were useful for them,” said Peter Levinson of Arity at InsurTech Connect 2025. By adopting Arity’s driving behavior data, Quincy Mutual was able to enhance segmentation and credibility in its territorial models — without the need for a major IT investment.

Results and insights

The integration of driving behavior data yielded several surprises:

Quincy Mutual discovered significant year-to-year variability in driving patterns, even at the zip code level.
The data enabled them to spot emerging risk hotspots before claims data would have revealed them.
The solution provided high levels of measurement across all their territories, not just extrapolated or modeled numbers.

Benefits of integrating driving behavior data

Improved risk segmentation

With real-time driving data, insurers can better identify risk differences within areas. This means you can offer competitive prices where risk is low and avoid underpricing where risk is high — ensuring your rates match actual driving behavior, not outdated proxies.

Actuarial justification and regulatory support

Driving behavior data provides a robust foundation for actuarial justification when filing rate changes with state departments of insurance. It also offers clearer, more intuitive explanations for rate adjustments, such as increases due to observed spikes in distracted driving.

Granularity and coverage

Arity’s Geosight data covers 15% of U.S. drivers.
The Geosight dataset spans 96% of populated zip codes in the United States.
Geosight data is collected daily and can be aggregated monthly, quarterly, or semi-annually to suit insurers’ needs.
Since inception in 2016, Arity has collected over 2 trillion miles of driving behavior data.

Accessibility and ease of integration

Carriers benefit from the high accessibility of driving behavior data. Minimal IT lift is required, and actuaries can work directly with the data, accelerating the path from insight to implementation.

About Arity, a mobility and analytics company

Who is Arity?

Arity is a data, mobility, and analytics company with a heritage in auto insurance. With the world’s largest driving dataset tied to insurance claims collected through mobile devices, in-car devices, and vehicles themselves, Arity derives unique insights that help insurers, developers, marketers, and communities understand and predict driving behavior at scale.

Arity data collection and value exchange

At Arity, we take data privacy seriously. Arity collects data through various sources, including directly from opted-in users using Arity mobile apps, such as Routely®, or by integrating our technology to support popular consumer apps, all to provide valuable features to users.

Geosight is built from aggregated, anonymized outputs only.

Conclusion

The transformation of territorial ratemaking is well underway, driven by the integration of driving behavior data. Auto insurers now have the tools to achieve improved segmentation, stronger regulatory support, and greater operational efficiency. As the industry continues to evolve, those who embrace these innovations will be best positioned to refine their territorial pricing strategies and deliver value to both their organizations and their customers.