Ten million drivers regularly break the 30mph limit and get away with it, according to research from Direct Line, the insurer, shared exclusively with Telegraph Money. If caught, they would face a fine, have penalty points added to their licence and suffer big rises in their insurance premiums.
Direct Line’s telematics arm, DrivePlus, said drivers frequently underestimated the speed at which they were travelling. It found that while just one in five motorists admitted to speeding in a 30mph zone, almost half (46pc) were actually breaking the speed limit.
Paul Felton, the head of telematics at Direct Line, said: “Drivers are speeding much more than they think they are, particularly the young.”
Direct Line, insurethebox and The Co-operative Insurance confirmed to Telegraph Money that they had handed over telematics records to the police on the production of a court order. However, they stressed that these instances involved serious criminal investigations, rather than minor road misdemeanours.
Ian Crowder of the AA said: “If a driver is involved in a serious crash and the police suspect they were exceeding the speed limit, they may ask to see the telematics data. We would only hand this over with a court order.”
But who else could this data be shared with? In Italy, driver data is shared between companies, particularly after an accident, helping them to sort out claims and price premiums more accurately.
This is currently not possible in Britain, as companies use different systems. However, the standardisation and sharing of motorists’ data is climbing up the insurance industry’s agenda as insurers struggle to justify high installation costs without maximising potential.
Last week, the AA, one of the most enthusiastic advocates of telematics, became the latest company to withdraw from the market. It blamed the costs involved. It was following in the footsteps of Aviva, which was the first insurer to launch a black box product more than a decade ago. After widespread trials, it found it couldn’t make the numbers add up and abandoned the project.
The AA is designing a new system and hopes to re-enter the market at some point, but admitted that the high upfront costs of its previous telematics policy meant it was not as cost-effective for either motorists or the company as it should have been.
For telematics to survive and thrive, the AA said trackers had to attract a bigger chunk of the mainstream market and information sharing had to become the norm.
Mr Crowder said: “We believe the telematics market is going through a process of change and growth, and will eventually be mainstream, and in time data will be shared in the same way as in Italy. But we didn’t have the right product to allow us to be at the forefront of that change.”
Charlotte Halkett of insurethebox, another telematics insurer, agreed. “I absolutely see we could get to the point where data could be standardised and shared, but we are a long way from that right now,” she said.
Graeme Trudgill, a director of the British Insurance Brokers’ Association, said he believed that the growth of “smart” cars, which come with trackers built in as standard, would cause the telematics market to expand significantly.
However, he acknowledged that telematics would never be attractive to all drivers, because tracking would cost some drivers more.
He said: “If you do high mileages, or you do night work, telematics will not work for you. These are things which will be penalised in the pricing of such cover.”
So what is telematics and who offers it? Will it save you money? And how secure is your data? We answer your questions.
What is telematics?
If you have a telematics car insurance policy, your insurer fits a device into your vehicle that tracks where you drive and when. It also monitors your speed, acceleration, cornering and braking.
The various systems are currently not compatible. The AA was using one called Quartix before it withdrew its product. The Co-op Insurance uses Ingenie. Insurethebox, which also operates Drive Like a Girl and Tesco’s telematics service, was using OctoBox until it decided to bring its data collection and storage in-house.
The AA is following this lead and devising its own system.
The Direct Line DrivePlus plug-in device is provided by Trakm8, a British manufacturing and design company, with data analysed by another firm. Customers can plug this one in themselves rather than having to have the device installed.
Aviva has a policy that uses a mobile phone telematics app.
Who can share this data?
At the moment, only the police can ask to see your driving history, but they would have to produce a court order before companies would release it.
Direct Line said its drivers owned their data and as a result they could take it with them if they moved to another insurer, potentially using a record of good driving to secure a lower premium.
The AA and insurethebox said they didn’t know who owned the data, but thought it was the company. Insurethebox said it did not believe customers could use their telematics data to lower their premiums by taking them elsewhere.
Will fitting a telematics box reduce my premium?
It may, but equally it may not. The policies promise discounts for smooth, appropriate driving. Although they work in different ways, each will essentially give you a score depending on speed, braking, cornering and acceleration, which could earn you discounts of up to 40pc on your premium.
In a worst-case scenario, a very low score could be counted against you at renewal and push up your premium.
Your annual mileage and the times of day at which you are on the road will also be monitored. Roads are more dangerous at certain times, such as after dark, at tea time and between 11pm and 6am. If more of your mileage is in these high-risk windows, this will count against you.
But telematics discounts – which are primarily, although not exclusively, aimed at young drivers aged under 25, whose premiums can exceed £1,000 a year – can be valuable. They also help develop drivers by monitoring their performance and offering feedback.
In the event of a serious accident, the trackers can aid rescue by setting off a series of alarms, allowing the insurer to alert the rescue services.
Ms Halkett said: “We had a driver upside down in a ditch in a remote country lane in the middle of the night. We were able to get the emergency services there quickly. Without our alarm, the driver would have been left there for hours, and the outcome could have been much worse.”
She added that telematics could help limit a premium rise after an accident or other incident.
“Many young drivers do have an accident shortly after passing their test,” she said. “That’s a fact of life. But if we can see, from the data, that he or she has learnt the lesson, that will count in their favour.”
How do the policies differ?
Direct Line gives its telematics customers a discount of up to 25pc at the outset, and then scores them for every journey they take. If they have been driving well, their discount at renewal can be as high as 40pc. Or it can be dropped completely.
Insurethebox, which claims to be the biggest telematics provider in Britain, offers policies to young drivers with limited annual mileage. If they drive well, they are awarded bonus miles free of charge. Tesco’s telematics policy is also run by the company and operates on a similar basis.
The company also offers Drive Like a Girl, available to all motorists. Here, if you drive safely, after three months you are awarded a refund on your initial premium, with one in 10 drivers getting £200 back. Safe driving is rewarded again with further discounts at renewal.
The Co-op’s young-driver product examines driving after every 90 days, and rewards the motorist with a refund on their premium for good behaviour. For annual policies the refund is paid back into their bank account or card, while for those who pay monthly it is taken off the next premium.
Aviva has a telematics mobile phone app that can be downloaded. You are given a notional premium before taking out the contract, while the company monitors your driving for 200 days. Depending on your driving, you may then be offered cover at a reduction of up to 20pc.
However, mobile phone apps are thought to be less reliable because drivers can switch them off, so discounts tend to be smaller.