There are now nearly 455,000 live policies, says a survey of 30 telematics brands by the British Insurance Brokers' Association (Biba).
Telematics policies can be a useful way for younger drivers in particular, who often face higher premiums, to cut the cost of their insurance. Biba said some young drivers can save more than £1,000 by using such a policy.
The technology generally uses hard-wired black boxes in cars to monitor factors such as the time of a journey, speed, cornering, acceleration and braking.
These are analysed to give a risk profile - with the safest drivers receiving the biggest discounts.
Graeme Trudgill, executive director at Biba, said: "We are delighted to see these figures increasing."
He said as well as enabling people to get cheaper premiums, telematics technology also results in safer roads, fewer cases of uninsured driving and greater personal safety because it can also act as a breakdown locator.
He said: "Telematics is becoming the motor insurance solution of choice among young drivers as they can take control of their own premiums by electing to have their driving behaviour monitored.
"Industry statistics show there is a 40% drop in crash risk when a new driver has a telematics policy. Telematics equipment also helps reduce theft claims, many doubling as vehicle tracker devices."