Insurer to provide tailored 'Pay As You Drive' insurance premiums for young drivers

Article date: 12 January 2005

Young drivers will now have the chance to get moreaffordable insurance premiums thanks to an innovative new schemefrom Norwich Union.

The UK’s largest insurer has launched‘Pay As You Drive’™ * For Young Drivers formotorists aged 18-21, which uses cutting-edge, in-car technology tocalculate their premiums based on when and how often they drivetheir car.

The ‘black box’ style device isfitted discreetly into the car and uses Global PositioningSatellite (GPS) technology to record the journeys of the car. Thisinformation is then transmitted securely to Norwich Union via amobile phone network.

The premiums will be calculated in a similar wayto mobile phone tariffs. Drivers will be able to control theirpremiums to more affordable levels by driving mainly during‘off peak’ times between the hours of 6am and 11pmrather than driving during ‘peak’ times between 11pmand 6am.

These tariffs have been calculated based onaccident statistics for the 18-21 age bracket,** which show thesemotorists are at much greater risk of being killed or seriouslyinjured in car accidents between the hours of 11pm and 6am.

By reflecting the time of day in the cost, thisinnovative test product not only makes insurance premiums moreaffordable, but it deters younger motorists from driving at nightwhen the conditions are less safe.

Features of the Pay As You Drive’™For Young Drivers product include:

  • a tariff per mile, with the rate personalised to each customerand dependent on the time of day the car is driven
  • the first 100 off peak miles each month are free
  • young drivers could see a saving of up to 30% a year off thecost of their premiums
  • premiums are billed monthly – premiums will vary monthlyif customers vary their driving
  • there is a one-off fee of £199 for the telematic device– this is expected to cost less than the savings to be madein premiums.
  • the box has a built in car locator – enabling customersto have their car located if there’s been an accident,breakdown or if it has been stolen

In August, Norwich Union launched a nationwidepilot scheme of ‘Pay As You Drive’™ insuranceamongst 5000 volunteers of all age ranges to investigate drivingpatterns and help set premium pricing.

Norwich Union is now able to launch this productfor young drivers because the pricing can already be calculated forthese motorists as the time of day is such a major factor for thisage group. The first 1500 boxes are ready to be fitted incustomers’ cars.

The recently published independent Greenawayreport into uninsured driving in the UK described ‘Pay As YouDrive’™ as a ‘potentially helpfulinnovation’ by setting rates for late-night driving at a highenough level to encourage young drivers not to use their vehicle atthis time.

Robert Ledger, programme director for the‘Pay As You Drive’™ insurance scheme, said: "Thescheme brings motor insurance into the 21st century byproviding affordable comprehensive insurance for young drivers inreturn for driving at safer times.

"There’s no getting away from it,Government statistics* show that this age group are more likely tobe killed or injured in road accidents between the hours of 11pmand 6am – and this has been factored into tariffs for thisproduct.

"Although the money-saving factor will probablybe the main appeal for young drivers, I imagine the road safetyaspect will appeal to their parents.

"Although this product may not suit all youngdrivers, we feel it does offer them an alternative to the standardmotor insurance that is currently available. And by having theirown insurance policy rather than being a named driver on theirparents’ policy, young drivers will be able to build up theirown no claims discount, making insurance even cheaper in thefuture."

Norwich Union – the UK’s largestinsurer – has an exclusive agreement with US insurerProgressive to pioneer ‘Pay As You Drive’™insurance in the UK and Europe using telematics technology.

Young motorists or parents who want theirchildren to sign up to be one of the 1,500 motorists on the‘Pay As You Drive’™ For Young Drivers testproduct can visit***or contact the ‘Pay As You Drive’™ insurance teamat


Media contacts:
Further informationand PAYD imagery is available by calling: Charlotte Speedy, MattBuchanan or Charlotte Ruddlesdin at QBO Bell Pottinger on 020 78612424 or 07976 251 409
Louise Zucchi at Norwich Union Press Office on 01603 684 506 or07800 699 664

Notes to Editors:
About‘Pay As You Drive’™insurance
* Norwich Union Insurance Limited islicensed under European patent application no.s 97904096.1 and01303501.9. Licensed from Progressive Casualty Insurance Company,USA and is proprietor of European patent (UK) no. 0700009.

Progressive (NYSE:PGR), with headquarters inMayfield Village, Ohio, is the fourth largest motor insurancecompany in the US. In business since 1937, the company provides alldrivers in 48 US states and the District of Columbia withcompetitive rates and 24 hour, in-person and online services.

** Statistics from the Department for Transporthave shown that people aged between 18 and 21 are more likely tohave accidents between 11 in the evening and 6am – with agreater risk of serious injury or fatality. At the same time feweraccidents happen during the day between the hours of 6am and11pm.

*** Website accessible from 7am onWednesday 12th January 2005

Norwich Union Direct’ ‘Pay As YouDrive’™ insurance policy is a comprehensive motorcover. The driver is charged a small fixed monthly payment whichprotects the vehicle against damage and theft when stationery.

In addition to the fixed payment the motoristwill be charged a personalised tariff for every mile recordedduring the Off-peak time zone (11am-6pm) as well as a flat rate of£1 per mile, during the Peak time (11.01pm to 5.59am).The devicecosts from £199.

IBM and Orange have partnered with Norwich Unionto deliver the ‘Pay As You Drive’™ insurancetechnology.

About Norwich Union Insurance

  • Norwich Union is the UK's largest insurer with a market share ofaround 14 per cent
  • With a focus on insurance for individuals and small businesses,Norwich Union insures:
    • - one in five households
    • - one in seven motor vehicles
    • - more than 800,000 businesses
  • Norwich Union products are available through a variety ofdistribution channels including brokers, corporate partners suchas banks and building societies and Norwich Union Direct.
  • Norwich Union's news releases and a selection of images areavailable on the Aviva internet press centre at
  • An ISDN facility is available for studio quality broadcast. Callthe press office on 01603 684 506
  • For all life and pensions media enquiries James Evans 01904452659
  • For all other media enquiries Louise Zucchi 01603 684 506
  • Norwich Union Insurance Limited Registered in England No 99122.Registered office: 8 Surrey Street, Norwich, NR1 3NG
  • Authorised and regulated by the Financial Services Authority
  • Members of the Aviva group

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