Norwich Union (NU) said it was currently running a pilot of its “pay as you drive” (PAYD) motor insurance scheme.
A “black box” telematic device has been fitted to the vehicles of 5,000 NU policyholders as part of the pilot scheme.
It said the cars involved in the pilot scheme belonged to a wide range of motorists, from low mileage users to long distance drivers, those who live in rural areas to town dwellers.
The black box is smaller in size than a DVD case and is installed either in the boot or passenger area of a customer's car. The box records real-time vehicle usage and sends the data to NU securely using similar technology to that used by mobile phones.
The pilot would last for up to two years and once the findings were evaluated, NU would confirm whether PAYD insurance would become available to all customers, it said.
Norwich Union has an exclusive deal with US insurer Progressive to use the telematics technology in the UK and Europe.
