How driving behavior data is transforming territorial pricing for auto insurance

For decades, territory has been one of the most powerful rating variables in auto insurance. It’s in nearly every carrier’s playbook – usually among the top five factors. But let’s be honest: Territorial pricing hasn’t changed much in years. Until now.

At ITC 2025, Arity explored why driving behavior data is the breakthrough that’s redefining territorial models – and why carriers who move first will gain a serious edge.

The problem with traditional territorial pricing

Using geographic information as a proxy can work, but it has limitations:

• Sparse loss data: Claims may not happen often in a given region, and when you drill down to ZIP-level, credibility may drop quickly.
• Outdated third-party data: Many carriers rely on surveys or stale datasets that don’t reflect risk on today’s roads.
• Behavioral shifts: COVID, return-to-office mandates, and new driving habits have changed risk patterns dramatically.

The bottom line? Relying on historical claims and proxies leaves gaps – and those gaps cost you. They can lead to mispriced territories, missed opportunities, and exposure to adverse selection.

Insurance price optimization with real driving behavior at scale

This is where driving behavior data, also known as mobility data, comes in.

Driving behavior data is now available for territorial ratemaking. This information isn’t modeled or forecasted – it’s measured, real-world activity from millions of U.S. drivers. The data is aggregated at the ZIP level with 96% coverage of populated zip codes.

What does mobility data unlock?

• Sharper segmentation: Price territories based on actual risk, not assumptions.
• Competitive advantage: Lower rates where risk is low, avoiding adverse selection where it’s high.
• Regulatory confidence: Support filings with intuitive, behavior-based insights.

This is more than a tweak, it’s a transformation. Instead of guessing, you’re pricing with precision.

Territorial ratemaking case study: Quincy Mutual

Quincy Mutual, a regional carrier in Massachusetts, faced the same challenges as many: limited data, a distorted view of risk, and strict regulatory requirements. By integrating driving behavior data, they can:

• Add credibility to thin or noisy internal data
• Reveal driving risks not seen in their book but that exists in their territory
• Improve segmentation by showing how ZIP-codes differ in real-world driving
• Flag shifts in current behavior as risk trends evolve

And here’s the kicker: They discovered that driving behavior isn’t static. It varies by ZIP and shifts year to year. Gaining visibility into these current trends gives them a dynamic edge over carriers relying on stale data. And, in just four months, Quincy went from evaluating the dataset to filing updated territory relativities.

Why driving data matters for every insurance carrier

You don’t need a telematics program or a massive IT overhaul to start. This data is granular, and easily accessible as a CSV file and ready to plug into your models. It’s a fast path to more refined risk segmentation and smarter pricing.

“Even if we had a telematics program, it would only reflect our customers. Instead, Geosight goes broader and shows the true magnitude of change in a territory.” – Todd Lehmann

The future of territorial pricing isn’t about where people live – it’s about how they drive.