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Boston-area companies merge to boost the business of tracking drivers’ behavior for auto insurers

A sensor made by Cambridge Mobile Telematics can detect crashes when placed in a vehicle.
A sensor made by Cambridge Mobile Telematics can detect crashes when placed in a vehicle.Lane Turner/GLOBE STAFF

Two rival Boston-area startups trying to remake the auto insurance industry are joining forces. Cambridge Mobile Telematics said Wednesday that it has acquired TrueMotion to create a leader in the field of tracking driver behavior to help set insurance rates.

Terms of the deal weren’t disclosed, but the acquisition was valued in the hundreds of millions of dollars, according to a source familiar with the transaction.

The combined company will employ about 400 people and provide telematics services to 21 of the 25 largest auto insurers in the United States. If Cambridge Mobile continues to grow, it would be on track to go public or perhaps be acquired by a larger tech or insurance company in the next few years.

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Both companies’ core products are apps on smartphones that use the sensors in the phones to collect data about how people are driving, such as whether they are speeding, frequently braking hard, or picking up their phones to text when they should be paying attention to the road.

Auto insurers are racing to offer policies that track customers’ actual driving patterns, relying on technology from companies such as Cambridge Mobile, TrueMotion, and five-year-old Arity, created by Allstate. Typically, auto insurance customers can pay lower premiums in exchange for agreeing to the rather intrusive monitoring.

Using driving data instead of charging based on where customers live and other demographics could provide insurers with more accurate information for setting rates. It also avoids relying on controversial data like credit scores, which can reflect societal biases. And some studies have shown that people drive more cautiously when they know their behavior is being tracked.

Cambridge Mobile CEO William Powers said the company also is using its core technology of collecting driving data from smartphones to expand beyond the insurance market. Under a family safety program, the company’s system automatically detects car accidents and summons help. Powers also is looking at how to leverage the data for mapping and assisting autonomous vehicles someday.

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“If you think about the number of cars on the road, the number of drivers on the road, and the number of smartphones in the world, these numbers get really large really quickly,” he said.

At a time when consumers are growing more concerned about excessive data collection and sharing with advertisers, Cambridge Mobile and TrueMotion said they have not been sharing data with anyone other than insurers. “Neither one of our companies is a bad actor, and we’re not reselling data, like some companies do,” Powers said. “The idea is to use the data to improve the program and to make people safer drivers.”

Both firms, which were founded about a decade ago, have received venture capital backing. Cambridge Mobile, an MIT spinout, grabbed a $500 million investment from Japan’s SoftBank Vision Fund in 2018. And TrueMotion has received smaller sums from General Catalyst, Bain Capital Ventures, Ten Coves Capital, Declaration Partners, and Lake Star. (TrueMotion started out as Censio, led by former Zipcar CEO Scott Griffith, who went on to Ford Motor Co.)

The merger came about after the crosstown rivals found themselves increasingly competing for the same deals.

”We happen to be based in each other’s backyard, and every time we would get into deal competition, there would be two left, that would be us,” said Ted Gramer, TrueMotion’s former CEO, who is now chief operating officer at Cambridge Mobile. “So there was some industrial logic that made sense to at least explore the opportunity to work together.”

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Aaron Pressman can be reached at aaron.pressman@globe.com. Follow him on Twitter @ampressman.