http://www.theregister.co.uk/2005/02/01/car_insurace_payd/print.html
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Original URL: http://www.theregister.co.uk/2005/02/01/car_insurace_payd/
Cost and privacy concerns stall PAYD car insurance
By Lucy Sherriff (lucy.sherriff at theregister.co.uk)
Published Tuesday 1st February 2005 11:53 GMT
Pay-as-you-drive car insurance will not be commercially viable anytime in
the next three years, according to Strategy Analytics. It cites privacy
concerns, launch costs and patent fees, along with back-end data
integration, as significant short-term obstacles to the technology's
mass-scale deployment.
Under pay-as-you-drive insurance, a black box records data about the
driver's journeys. Charges vary, according to the risk of each journey.
Last August, Norwich Union started testing the technology in the UK, with a
pilot scheme for younger drivers
(http://www.aviva.com/index.asp?PageID=55&year=&newsid=1971&filter=corporate,csr,uklife,intlife,ukgeneral,intgeneral,morleyfm,intfm)
launched this year.
Clare Hughes, a Strategy Analytics analyst, said: "While PAYD protects
drivers from generalized assumptions, there are still major hurdles to
overcome before PAYD insurance schemes are commercially viable; and these
are not going to be successfully addressed for a number of years."
But in due course, PAYD will become widespread, she said. Its introduction
will be driven by an increased government focus on road safety, the
availability of tamper-proof vehicle data to verify insurance claims, and
the potential cost savings to the companies and the consumer.
"The days of the once a year insurance premium will eventually disappear
for the majority of consumers, with the rollout of risk-based variable
monthly billing." .
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R. A. Hettinga