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British Company Launches "Pay As You Drive" Insurance
In an innovative approach to auto insurance, British-based Norwich Union is offering policies based on car usage. Utilizing GPS systems installed in vehicles, premiums will be charged according to how often motorists drive, when they drive, and where they go. The type of road taken and the mileage accrued will also be figured into the regular itemized bills customers will receive. The price will be figured from a penny per mile and up.
The "pay as you drive" scheme was designed as part of an effort to control insurance costs, according to Norwich Union, which predicts drivers will say upward to a third on their current premium payments.
Ian Napier, the company's director of the "pay as you drive" program said, "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."
The plan was tested on a group of 5,000 motorists in trials conducted since 2004, which became part of the underlying risk assessments that went into the design of the insurance coverage.
The company figures that driving in the UK during the morning weekday rush hour is 50 percent more likely to result in accidents than weekend or evening driving. The most serious accidents are more likely to happen at night. Motorway or highway driving is actually figured as being ten times safer than traveling on low-speed urban streets.
Premiums for drivers between the ages of 18 and 23 will be charged lower rates if they are willing not to drive at night. Some 45 percent of fatal automobile accidents involve younger drivers between the hours of 11 p.m. and 6 a.m.
Kay Martin of Norwich said, "The future of insurance is tailored products to suit people's lifestyle and the launch of 'pay as you drive' insurance is the first step in this direction.
Source: http://today.reuters.co.uk (added on Oct 05, 2006)
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