Sept/Oct 2004

Fleet operators fitting an approved telematics system in their vehicles (and currently that means a Cybit system) could get price reductions if they insure through Norwich Union. That's the possibility opened up by a scheme called Fleet Telematics launched by the insurer this autumn.

Whilst not promising specific price reductions, the scheme offers various clear incentives to users - in particular, fixed-price insurance cover over two or three years, and annual rebates when key performance indicator targets are achieved. Also thrown in are risk management advice and reporting, and best-practice guidance on fleet operations.

To qualify, users have to fit an approved telematics system, and initially the only such system is Cybit's Fleetstar-Online telematics technology, which starts at around £20 per vehicle per month. So that gives users a good guide to the level of rebate that would be needed on the basis of a simple cost-for-cost comparison. Norwich Union says it may approve other telematics systems later if they meet its criteria.

According to Mark Keavney, Norwich Union's commercial motor product manager: "We will be able to offer truly bespoke and relevant risk management advice, specific to the fleet in question, to help them manage their occupational road risks." He adds: "We expect that in the future we will be able to offer an even more extensive range of telematics-related services to the fleet market."

There is already evidence of this; Norwich Union currently has a separate scheme on trial which aims to relate insurance premiums directly to vehicle use. This system, which is called Pay As You Drive, attracted wide consumer press interest when it was announced last year.

Its key component is a "black box" the size of a DVD player, which is fitted in the boot of a car or somewhere in the passenger area. It incorporates a GPS positioning device and a GSM phone module working on the Orange system. IBM has provided the hardware and integration for this system, which is believed to be fitted in around 5,000 vehicles.

Whilst many fleet operators will probably welcome "fairer" insurance schemes that more accurately reflect real-world usage patterns, the downside of any selective insurance schemes is that they could place a greater proportion of the currently shared premium burden on those at higher risk. But it remains to be seen how the results would affect overall premiums in the longer term.