Norwich Union is the UK's largest insurer, covering one in seven motor vehicles, and has a market share of around 15 per cent. It is one of the few insurers to embrace the latest telematic technologies to introduce more customised motor products and services for its customers, and has very much led the way in this area. Working in partnership with IBM and Orange, for the telematics software and network coverage respectively, ‘Pay As You Drive’ was trialed back in 2003 and launched across the UK in October 2006. It uses the latest GPS technology to allow premiums to be calculated based on when, where and how far customers drive their vehicles. The service works by installing a GPS device the size of a DVD case in the car. This stores information about each car journey before transmitting it automatically to Norwich Union via a secure GSM network. The journey data is then translated into a bill, similar to a mobile phone bill, which provides details of each element used to calculate the premium. This comprises a fixed monthly fee to cover risks such as fire and theft, comparable to a ‘line rental’ charge on a phone bill, and a variable amount based on recorded data such as mileage driven, roads used and time of day of each journey, etc.

For young drivers, the primary target market, rates peak at night between 11pm and 6am, when figures show that young motorists are at much greater risk of having a major accident and seriously injuring themselves or others. For drivers aged over 24 rates vary according to the time of day and where they drive, with off-peak rates falling outside the morning rush hour and midnight to 5am. A year after the launch customer feedback was overwhelmingly positive with 90% looking to renew their policy, and with 30% fewer claims reported amongst all “Pay As You Drive” insurance customers, the road safety benefit is immediately clear. In a sector traditionally focused on price-driven annual renewal, this new service has changed the frequency of customer interaction, deepened the relationship with Aviva and, of great concern to others in the sector, enabled Aviva to increase its share of the all important first-time drivers market. As this and similar technology- enabled, customer-impacting services are rolled out across the company’s key markets, despite escalating price competition, future growth for Aviva is anticipated.

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