That's what it is supposed to be. Reality differs somewhat with many insurance companies, hence why I will not have one in my car for any reason.
Usually, drivers are scored on a number of metrics. These can be things like the smoothness of your driving, compliance with speed limits, the times you're driving at and so on. You are penalised for what the monitoring deems as bad driving, and if you get penalised too much, your insurance may be cancelled.
But, it's obviously a human doing this monitoring, so a lot of context gets lost. A common issue would be being penalised for hard acceleration... but it's a short slip road. Appropriate acceleration to emerge safely? Penalised! Dangerously emerging at 35? Perfect driving!
One of my friends who has a box in his car gets penalised constantly for sharp cornering.... the junction has a sharp angle. Clearly, he should put the car in the hedge opposite so he doesnt turn so sharply.
The speed limits on the tracker may be wrong, or the GPS signal could be blocked in a tunnel for example resulting in it detecting a high speed when you jump from one end to the other of the tunnel according to its tracking.
So the end result of this is drivers who are encouraged to drive poorly by a black box that's meant to enforce "good" driving, and lots of young drivers getting their insurance cancelled. This latter point is a big deal because you need to declare that for life when getting car insurance. Points, driving bans, etc, go away after a few years. Getting your insurance cancelled does not, and a lot of young drivers don't know this.
Policies with a box are often cheaper. For me, it would have saved I think about 90 quid (box quotes for this year were about 450 iirc, I paid 540. That's driving a 2012 1L Citroën C1 with 2 years NCD and license held for 2 years, at 20 years old). With some cars, the price difference is much higher.