Why is a fantastic technology like pay-as-you-drive insurance only being provided by one insurer?

By David Field

When I heard that pay-as-you drive insurance was making its way over to the UK, I must admit I was very pleased.

I had caught fleeting glimpses of it in the news over the last few months and the fact that it was up and running in the US would have irked me some had it not been something I knew would eventually make its way over here.

I mean, innovations like this always end up making it big on a global scale - like the internet, or sliced bread.

Pay-as-you-go insurance, for those that are out of the loop, is an innovative concept that involves installing a satellite navigation system that tracks the use of one's car. This means that insurers can then charge policy holders according to the amount they drive.

This results in occasional users being charged less than those who drive frequently and are consequently - as is the gospel of modern insurance - statistically less likely to have a crash.

In fact, once it gets going, there is no reason its use couldn't be extended to small business liability insurance on company vehicles.

Obviously there are all the statistical anomalies that make this kind of scheme that vary premiums - in cases of car insurance for learner drivers for example - that mean it is not just the amount a vehicle is used that determines premiums.

I imagine this would also be the case for cheap scooter insurance too.

This also makes it less attractive for certain drivers - like those who have never had a crash in 60 years but that still use their car all day.

But despite me belonging to this last group to whom this service is of little appeal, I'm all in favour of technology that is user orientated - even if only to a select few as in this case.

However, the fact that it is only being provided by one insurer in the UK almost negates all of its bonuses.

For me, if the insurance world is going to introduce a scheme like this that's going to benefit consumers, then it really needs to be provided by more than one insurer to keep it competitive.

In this case however, Norwich Union has won sole piloting rights for the scheme.

Alright, I'll concede that it is likely to eventually be offered by more than one once the patent is lifted on the technology or whatever needs to happen to allow other firms to market the technology, but is it really right that we should be forced to switch insurance providers just to try it out?

I'm not convinced.