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Norwich Union launches pay-as-you-drive insurance

Norwich Union has launched the UK's first pay-as-you-drive insurance policy, an innovation that will allow motorists to take greater control over their insurance and, in some cases, save up to one third on their premiums.

Norwich Union has been trialing pay-as-you-drive insurance since 2004, when a pilot scheme involving 5,000 motorists was launched.

Customers who take up the new policy will have a global positioning device fitted to their car, which will allow Norwich Union to track the movements of the car and build the insurance policy around each individual motorist.

Customers will receive monthly bills based on car usage, including time of day, type of road, and mileage. Itemized billing will be available – much like mobile phone bills – with the premiums for each journey calculated and totaled. This transparent approach to motor insurance should help customers control their motor insurance costs in a way that has not been possible before now.

According to Norwich Union, 67% of all drivers and nine out of 10 low mileage motorists say they would consider pay-as-you-drive insurance.

We’re confident that pay-as-you-drive insurance is simply a fairer way of calculating premiums and gives customers greater control, flexibility and choice. That’s why we expect the first ever pay-as-you-drive insurance proposition in the UK to be a huge success with motorists, said Iain Napier, director of Norwich Union’s pay-as-you-drive insurance.