Pay-As-You-Go Premiums Get Go Ahead

Norwich Union is to go ahead with plans to introduce insurance premiums based on a pay-as-you-drive basis, despite heavy criticism from civil liberties groups.

Aimed predominantly as younger and older drivers, the plans – which will involve the fitting of a black box device to each vehicle signed up to the policy – will see a driver’s usage habits captured and used as the basis for the premium. Under the new scheme initially announced last month, traditional policy pricing based on driver age, vehicle value and postcode will be ditched and motorists will instead be charged per month according to how and when they use their cars. For example, those who drive more during nighttime hours will pay more because statistically they are more likely to suffer an accident.

A trial of the system by Norwich Union is said to have been a resounding success, but it has come under fire from civil liberties groups that fear the satellite-based locator technology will form the basis of a national vehicle-monitoring and road pricing network, which could be used to retrospectively charge drivers for criminal activity such as breaking speed limits.

While the scheme is expected to result in long-term savings, it is understood that subscribers will have to pay a one-off black box installation fee, which is likely to be more than £100. A Norwich Union spokesman rather optimistically predicted that more than half of Britain’s drivers would switch to a pay-as-you-go premium.


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