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Pay-as-you-drive insurance scheme grows

01 August 2006

  • Norwich Union expands GPS insurance scheme
  • 100,000 people to use it by the end of 2006
  • System could be used to calculate road tax

GPS devices like satellite navigation could soon help work out your insurance premium

More drivers could soon be paying insurance bills depending on how little or how much they use their car.

Over the past 18 months, insurer Norwich Union has been conducting a trial of 1500 young drivers and 5000 other motorists in the UK to see if there is a future in pay-as-you-go insurance.

Now the company wants to expand the scheme, and expects to have 100,000 users by the end of the year.

The system works by putting a global positioning system (GPS) monitor in the car, which tracks the amount of driving a motorist does.

This information is sent back to Norwich Union, which then calculates an accurate risk premium for individual drivers based on a cost-per-mile basis.

The system benefits low-mileage or infrequent drivers, who currently pay the same premium as high-mileage drivers. It could also be used to work out how much road tax an individual could pay, or whether a driver is a high risk based on speeding or driving dangerously.

Norwich Union has not yet said when it will release the scheme into the mass market.

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