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 launched this year.

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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