UK insurer Norwich Union has begun pilot tests of its 'pay as you drive' insurance technology which will allow the firm to collect real-time data using a 'black-box' device installed in customers' vehicles and then use the information to calculate monthly insurance payments.
The technology and telecommunications for the system is provided by IBM and Orange.
The 'black box' telematics devices have been fitted to 5000 customer cars across the UK. Norwich Union says the vehicles involved in the pilot scheme belong to a wide range of motorists - from low mileage users to long distance drivers, those who live in rural areas to town dwellers.
The device has the ability to locate a vehicle in the event of theft and in future will provide instant notification of accidents to the insurer. Future enhancements such as panic buttons and real-time route planning may also be added.
Norwich Union says the pilot will last for up to two years and will confirm whether the system will be rolled out to all customers after the initial findings have been evaluated.
Robert Ledger, programme director for the 'pay as you drive' insurance scheme at Norwich Union, says: "We believe this initiative is a major breakthrough in the development of more tailored motor insurance premiums enabling us to treat all drivers as individuals."
The Automobile Association says drivers will need to carefully consider the implications of black box motoring before they sign-up.
"Most motorists appreciate the freedom that their car provides and may not welcome the kind of restrictions that this new system imposes," the AA says.
It points out that the age and experience of the driver, the make and model of car and where the car is normally kept are the biggest factors in pricing insurance cover.