Norwich Union stops 'pay as you drive' - while the Market is increasing
18 Jun 2008
Norwich Union has suspended its mileage-based insurance scheme less than two years after it was launched, says BBC. But the UK insurance company has multiple telematics- and insurance-related projects on the go. PAYD was just one of them, with IBM infrastructure and TrafficMaster devices. The other - a fleet product - is actually pretty successful.
According to Telematics Update, there are quite a few reasons why Norwich Union's PAYD product fell flat while others are very successful. Firstly, the offer is based purely on price, not on service. In the price-sensitive insurance market, this left NU open to undercutting by competitors. Secondly, while the hardware is complex (read: "expensive"), and included navigation, it did not include a crash sensor. Thus, although navigation was offered, a driver assistance service was not.
Industry experts believe that a better way to introduce insurance telematics applications - as shown in Italy, Spain and Austria - has been seen with a "smooth transition" from insurer-provided after-theft tracking and recovery, road assistance, emergency call and a discount, followed - when the market is ready - by the introduction of PAYD insurance options.
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