Research from the British Insurers Brokers' Association (Biba) shows that over the past two years there have been a fivefold increase in the number of people installing "black box" technology in their vehicles. These devices monitor their driving habits in a bid to cut insurance costs.
As cheap car insurance deals disappear almost 200,000 drivers have now signed up to "telematic" insurance, in some cases halving their premiums. A Biba spokesman said it expected numbers to "snowball", with more than half a million motorists opting to install the technology in exchange for lower car insurance premiums. Take up of the ‘black box’ is already strong in the US where approximately 80% of vehicles have them fitted as standard. Over the next few years, demand in the UK is expected to come from female drivers and younger motorists in particular, who are likely to be disadvantaged by new European rules that come into effect at the end of this year. The new rules will stipulate that insurance companies will no longer be able to use a person's sex when setting premiums. The rule is likely to cause huge increases in insurance costs for many women, with those aged less than 25 facing the biggest price rises. This is because younger male drivers make the most car insurance claims and the most expensive claims, as they are more likely to be involved in a high-speed accident, causing serious injury and extensive damage to vehicles.
Currently, the average motor insurance premium is close to £3,000 for a young male driver, but just under £1,700 for women drivers of the same age. It is predicted that when the new rules came into effect, women could expect to see the price they pay rise by at least 25%, adding more than £400 to their motoring costs.
Drivers who install a ‘black box’ will have access to an online record of their driving habits including a speed analysis, where and when they drive and how they anticipate traffic (such as whether they hit the brakes too hard, too often), as well as how they drive around corners and adapt their driving to the circumstances. In the past, take-up of the black boxes has been slow as drivers were concerned about how the information is used, but there are strict data protection laws. By signing up to one of these schemes, you have given the insurer permission to use the information to set your insurance premiums, but the insurer would not be able to pass on information to third parties for example informing the authorities that you had broken the speed limit.
Opting for black box technology will benefit women drivers as well as the more cautious male drivers as you are not penalised simply for age and sex. It is not just young drivers who could benefit, middle aged drivers who have safer driving records and drivers who believe they are still safe on the roads can benefit. Insurers often start to bump premiums up again for motorists in their seventies and eighties, as they are concerned about the higher accident rate among this age group.
Many insurers will install the black box free of charge, although they recoup the cost through their premiums. Others ask for an upfront fee. Customers are free to switch insurers if they find that they are not saving money, but there may be a charge which can be as much as £100 to remove the box at a later date.