David Prosser: Big Brother could save you a fortune

Just a month ago in this column, I lambasted Norwich Union for raising its motor insurance premiums by up to 40 per cent. So it's only fair to give credit where it's due: the insurer's launch this week of pay-as-you-go motor cover is a genuine innovation in an industry hardly renowned for modern thinking. Even better, it could save many drivers lots of money.

The idea is that you pay £50 to have installed in your car a small black box that sends details of your driving habits, by satellite, back to NU. It then charges you a monthly premium based on how far you've driven, at what time of day and on what type of roads.

The clever thing about the policy is that it harnesses new technology to exploit what motor insurers have long known about driving. Years of statistics show that accidents are 50 per cent more likely to happen during morning rush hour, that serious accidents are more likely at night, and that - somewhat counter-intuitively - motorway driving is 10 times safer than driving on low-speed roads in urban areas.

Now that NU can find out which of these categories your driving falls into, it can charge you accordingly. Motorists will pay from 1p a mile for off-peak motorway driving, for example, but from 4p a mile when they're in towns. Young drivers pay more - up to £1 a mile if they're on the roads after 11pm, when accidents are most likely to happen.

The policy turns one of the basics of insurance on its head. This is a business that is usually all about pooling risk - good news if you're more likely than most to claim on your cover, but less helpful if you're a safe driver, because you end up subsidising the former group.

NU's premiums, by contrast, will be individually tailored, which could help drivers in both the low and high-risk insurance groups. Young drivers who don't fit the stereotype should save money, while older drivers who don't do many miles, or avoid more risky driving situations, will be better off too. For example, NU reckons drivers who cover less than 8,000 miles a year will all save money.

There are just a few questions to ponder. First, motor insurance is super-competitive, so expect to see more policies of this type (More Than already offers something similar). In which case, will you have to get a new device installed each time you change insurer? That would be a real barrier to shopping around.

Then there's the Big Brother issue. NU's black box is a clever bit of kit capable of giving the insurer all sorts of details about how you use your car - how fast you accelerate or take bends, say, or even where you travel to and from.

Many people may feel uncomfortable about insurers monitoring them so closely - the black box could even be used as a more effective way of catching speeding drivers than speed cameras.

Finally, the Government is currently blowing hot and cold on the idea of road charging, not least because it is worried about the technology of such a scheme. NU's black boxes could be a big help to ministers keen to travel down this road - which might not please even those drivers happy to pay lower insurance premiums.

n n n Silly old Tesco. The retailer that gets almost everything right - hence its ever-increasing domination of Britain's retail scene - has dropped a clanger with its self-service tills.

If you have a debit or credit card, these tills speed up paying for your goods, but crucially don't require shoppers to use chip-and-PIN technology or even to sign a receipt. Which? says the tills, in use in 320 stores, have thus become an easy target for fraudsters, who have been cashing in.

Tesco has promised to update the tills by December and says they were rolled out two years ago before chip-and-PIN was fully introduced. But what a remarkable lack of foresight from a company usually so on the ball. Fortunately, its customers are not liable for any losses.