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Norwich Union introduces ‘Pay As You Drive’ insurance premiums

Norwich Union has launched a scheme aimed at lowering insurance prices for young drivers by using in-car technology that calculates premiums as they drive.

The ‘Pay As You Drive’ initiative is designed to offer a potential saving of 30 percent on insurance for drivers aged 18 21 by using Global Positioning Satellite (GPS) technology to record journeys though an appliance fitted in the car.

‘Pay As You Drive’ presents an opportunity for drivers to save money on their premiums by driving mainly during the cheaper hours of 6am and 11pm rather than the more expensive 11pm and 6am, when, as statistics have shown, most accidents involving younger motorists occur.

In a further attempt to deter young drivers from driving at unsafe hours, the scheme offers 100 free off-peak miles a month and a car locator, which enables customers to have their car located if there’s been an accident, breakdown or if it has been stolen

IBM and Orange have assisted Norwich Union in testing the technology.

Robert Ledger, programme director for the ‘Pay As You Drive’ insurance scheme, said: Although this product may not suit all young drivers, we feel it does offer them an alternative to the standard motor insurance that is currently available. And by having their own insurance policy rather than being a named driver on their parents’ policy, young drivers will be able to build up their own no claims discount, making insurance even cheaper in the future.

The AA has responded to the proposals positively, but is keen to urge users not to over run on the time limits and accrue unnecessary premium costs.

It also pointed out that the car locator technology might not be able to differentiate between different insurance profiles.