UK insurance firm Norwich Union says it has ordered a further 35,000 in-car telematics black boxes for its 'pay as you drive' insurance scheme after a pilot of the technology indicated that "many motorists might benefit from a usage-based insurance product".
Norwich Union began pilots of its 'pay as you drive' programme in February 2002. Under an agreement signed with US insurer Progressive, the firm rolled out a number of "black box" devices which record the time, distance and location of a vehicle's journeys. This allows monthly insurance payments to be calculated based on how often, when and where a vehicle is actually used.
Simon Machell, chief executive, Norwich Union Insurance, says ongoing pilots of the in-car technology have proved extremely successful, enabling the company to better understand vehicle usage and driving behaviour and providing an accurate risk assessment tool.
The insurer is now increasing the number of boxes in its pilot programme and has purchased a further 35,000 units from UK-based Trafficmaster Plc.
"By increasing the number of boxes in our pilot, we will have access to additional data to help ensure that any future 'pay as you drive' insurance propositions are best suited to British motorists," says Machell. "Our learnings from our pilot are ongoing and substantial, and will shape any future 'pay as you drive' insurance products."
Norwich Union says the pilot to date has recorded over 10 million journeys from its 5000 customers, with an average of 8500 miles driven per customer. This average figure, based on one year's worth of driving, is well below the national average of 11,000 miles per year and indicates that motorists are adjusting their behaviour to minimise their insurance premiums and opting instead to walk or cycle for short journeys.