Norwich Union Tests ‘Pay-as-you-Go’ Auto Insurance

Norwich Union, the U.K.’s largest P/C insurer, announced plans to begin testing a pilot scheme called “Pay As You Drive”(TM) insurance, which it says could revolutionize the way auto coverage is provided.

“Hundreds of motorists are now road-testing revolutionary technology that could mean insurance premiums in the future are calculated on how often, where and when people drive their cars,” said the company’s announcement. Norwich hopes that the new system will give its customers a better idea of factors used in setting premiums, and will give them “greater control to adjust their driving patterns to reduce their motoring costs. “

“‘Black box ‘ telematics devices are currently being fitted into 5,000 Norwich Union customer cars across the UK. The cars 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,” said Norwich. It described the ‘black box as “smaller in size than a DVD case,” which is “installed either in the boot [trunk] or passenger area of a customer’s car. The box records real-time vehicle usage and sends the data to Norwich Union securely using similar technology to that used by mobile phones.

“The pilot will last for up to two years and once the findings are evaluated, Norwich Union will confirm whether ‘Pay As You Drive'(TM) insurance will become available to all customers.”

The announcement described the experience of Linda Jones, one of the first Norwich customers to have the system installed, who said: “The PAYD pilot grabbed my attention as it seemed a much fairer way of charging for car insurance. It doesn’t penalise me for how other motorists drive and it’s also more transparent. I like the fact that in time I’ll receive a monthly bill, similar to my phone bill showing exactly how my premium has been calculated.”

The telematics device has the ability to locate a vehicle in the event of theft and in the future it will be able to provide the insurer with instant notification of accidents. Further enhancements, such as panic buttons and real-time route planning, could also feature in the longer term.

Robert Ledger, program director for the ‘Pay As You Drive'(TM) insurance scheme commented: “After months of careful planning it’s great to see drivers on the road with ‘Pay As You Drive'(TM) insurance technology. 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. And we’re confident our customers will fully appreciate the benefits too.

“The interest in the pilot scheme has been phenomenal. We could have filled the pilot twice over with the amount of requests we’ve had from interested motorists, not just within the UK but from drivers around the world. “

Norwich Union, a division of the U.K.’s Aviva, has an exclusive agreement with U.S. insurer Progressive to pioneer ‘Pay As You Drive'(TM) insurance in the UK and Europe using the telematics technology.