Wednesday 18th August 2004

Pay as You Drive Insurance

Norwich Union experiment with black boxes tracking their customers

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Motor insurance is set for a shake up with Norwich Union's pilot scheme of 'Pay As You Drive' insurance.

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.

For the first time motorists will begin to understand what drives their premiums, ultimately allowing them to have greater control and 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.

The black box is smaller in size than a DVD case and is installed either in the boot 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' insurance will become available to all customers.

One of the first volunteers to have her car fitted with a 'Pay As You Drive'(TM) insurance system is Linda Jones, from Chichester.

She 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 revolutionary technology adapted for the 'Pay As You Drive' insurance scheme is ideal for the safety and security-conscious motorist. Norwich Union's telematics device has the ability to locate a vehicle in the event of theft and in future will provide instant notification of accidents to the insurer. Future enhancements such as panic buttons and real-time route planning could also feature in the longer term.

Robert Ledger, programme director for the scheme said: "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.

Norwich Union has an exclusive agreement with US insurer Progressive to pioneer 'Pay As You Drive' insurance in the UK and Europe using telematics technology.

[spunagain]

This could be a can of worms! Presumably the system is GPS based,which can of course be used to measure a car's speed. I can imagine insurance companies introducing small print stating that insurance is invalid or claims are reduced if the insured vehicle is used to break the law etc.etc. Is this possible/legal or am I just being alarmist?

How will this data be policed in terms of privacy? We have already heard of engine management data being used to prosecute drivers for speeding prior to an accident.
What is to stop this information being used in a similar way? Is it protected under the Data protection act and what protection does it have?

The system would also be capable of logging when you are speeding and then sending that data to the insurance company who then pass it along with your location to the police. (In fact this data will be sent to the insurnce company in the basic system , it is just up to the insurnace company what they do with it.)

I am not against prosecution for dangerous driving but, drivers should be made aware of what the uses the Big Brother in a Box (TM) they have in their car is capable of.

On the plus side I guess if the BBB were hidden in the car it could be used as a free anti theft tracking device!

What do PHers think?

Also what do the Legal types think are the real privacy issues?

Spunagain


>>> Edited by spunagain on Wednesday 18th August 08:55 cos I can't spell

>>> Edited by spunagain on Wednesday 18th August 08:57

[ChrisO]

I've just had the very same discussion with somebody in the office. I've a feeling this has been discussed somewhere before - doesn't one of the new Aston Martins have a computer or something in it that has exactly the same capabilities? I tried searching for the thread but couldn't find it.

[ohopkins]

Just proves yet again that people who are willing to give up liberty for a little temporary security deserve neither.

With apologies to Frank.

[Raks]

also, how long before someone comes along and can manipulate the signal the box sends, so that their car charges to your account

i say stick to the usual way, and shop around for a good quote. it's more fun !

[Brendan G]

Of course, the worrying thing is; if this thing takes off, insurance companies won't want to touch anybody without one of these boxes. They'll assume people who don't want this must have something to hide, and must therefore be a higher risk.
This will be yet another way of dumbing down driving standards. People will be too scared to get anywhere near the speed limit, or to overtake incase the extra speed bumps up their premium.
The roads will just keep on getting more and more jammed up with mindless sheep following each other at 35mph in 60mph limits.

Bugger.

[Don]

These things are only going to be cost effective for people who use their car only occasionally...

So if you have a low-mileage sports/classic car that comes out only on sunny Sundays then perhaps you could save money.

Of course...what you do in that sunny Sundays car is likely to mean you don't want such a device on board.

So who else could benefit and why would they want it? Maybe SRM who literally does 4K miles per year and never gets above 30 anyway?

So...would I get one? Errr. No way...

[Mr Whippy]

I like the way it's saying that people will alter their driving patterns to lower their premium.

Why oh why does it matter what your patterns are for driving are all of a sudden.
Do insurance companies ask right now when you go to the supermarket or where do you sometimes drive for lunch etc etc.

All it'll do is give them even more reason to charge you an unreasonable amount for doing something totally reasonable in your car... ie, driving from a to b.

Even more reason to just give up and go uninsured, taxed and mot'd... This whole electronic policing is just getting too far now, best to just opt out

Dave

[MGV8]

In two years time this will have been seen as a success and we will all be asked/told to have this fitted to OUR cars.

The year after the government say will would it not be nice to charge tax that way too.
We will then be paying more on our insurance and road tax for driving to work.

In six years time the government will then link the boxes to speed detectors and we will automatically be find for speeding.

In ten year time "car RIP". Later that year as part of the ID card scheme we will have to have a chip implanted in us.

Now 15 years on and we are taxed for walking at busy time or being in gathering of over 4 people.

Its not even 1984!

[cliffe_mafia]

Insurance Companies ask for your annual mileage anyway so why do they need this box too?

[dern]

It's just a way to make more money. If it made our policies cheaper overall then norwich union wouldn't do it. At the very least the cost of the average policy would rise by enough to cover the cost of the box in order to maintain profits.

Mark

[shagga]

The only people who will benefit will be those who do next to no miles per year. Overall this will be just another way the insurance companies jack up their overall revenue. Can you see them reporting to their shareholders " great year guys we have just reduced everyones premiums and our overall revenue has gone down by x million this year" I dont think so!!!!

[spunagain]

The box won't be cheap. Even in volume an GPS module costs about £30 plus another £30 fo the GSM module plus the antennas plus the assembly and other bits you are looking ar £100-£200 cost.

Think of bolting a mobile phone to a hand held GPS unit and you are pretty close to what this thing is.

Not to mention the GSM line and data call costs!

Who pays for that?

Spun again

[V8 Archie]

cliffe_mafia said:

Insurance Companies ask for your annual mileage anyway so why do they need this box too?

Because if you are driving at rush hour you are presumably more likely to have a coming together than at 3am. Ditto London vs. some little village out in the sticks. It's easy to see why it could be an attractive option for some (low usage) customers. I, for example should be able to get a whopping reduction on my current premiums because I rarely drive the car anywhere near where it is garaged. At the moment I lose out horribly on the post-code lottery even though the car is only out of the garage and in the area if I am on my way out of London or on my way home.

That said, they will struggle to get one of those boxes into my car. Extra weight is not welcome, especially in that form .

[stackmonkey]

As spunagain, duncan g, and MGV8 said, it's the thin end of the wedge.

They'll be introduced for this ostensibly good, but weak reason, and then the system gradually expanded compulsorily to include tax, speeding, and tracking of cars and people,

[ferrari355gtb]

Shouldn't people who use the road more pay more ie a variable rate (like on petrol). It seems fair - especially as I don't do many miles !!

Most black boxes on cars now measure speed anyway and the insurance people don't check them. At the end of the day I reckon over 90% of accidents are caused by someone doing something illegal (ie not following the highway code) - surely they can't stop paying a claim just becuase you broke the highway code ? (CAN THEY) - travelling to close to the car in front etc etc.

[turbosei]

For the insurance companies it's a double payout. They get to charge for usage - which will almost certainly be more expensive. Plus the data collected will help them avoid paying out on claims.

If every car had one they'd be able to tell; speed, distance from car in front, braking effort (deceleration). Plus on policies with a declared mileage of x you'll immediately be uninsured at x+1.

Are you a higher risk if you accelerate and decelerate quickly and frequently? Or if you never rise above 20mph, are some roads a higher risk than others? - exactly how are we to change our driving patterns to reduce the cost?

Talking about cost. At £600 for about 12,000 miles my insurance costs 5p a mile. At 30mph that's 2.5p/minute - much less than my mobile calls cost. So who's subsidising the GSM part of this or will my insurance rise to the 10p/min that my T-Mobile calls cost (equivalent to £2400 a year extrapolated back to my current premium).

[chickensoup]

Claimed on the news this morning that "some US drivers found a 20% saving"; which is fine
EXCEPT
When I call round at renewal time I get nearer a 50% variation best to worst. If insurance is not fixed price, it cannot be quoted.

Would anyone trust an insurance company to "do their best" without EVER being able to compare quotes

Pay as you drive insurance = rip off cartel (IMHO)

[justinp]

shagga said:

The only people who will benefit will be those who do next to no miles per year....

And the Software Contractors who got paid to write the software.



>> Edited by justinp on Wednesday 18th August 13:19

[lavaman]

What you all must remember is that for every company that requires a black box to have your car insured they'll be other who will insure without one, free market afterall.

[golders]

This is going to be very bad news for all you performance car drivers. As has been mentioned above the Governemnt will start monitoring your speed / fining you automatically.

You may have a nice TVR / Porsche etc but you will not be able to go above the speed limit. It will bring an end to performance cars in the UK other than for Trackday use.

This is such a bad thing.

Golders

www.geocities.com/mpgcalc