Technology is set to become increasingly important to the insurance industry as it looks to improve its service, according to the Association of British Insurers (ABI).
Malcolm Tarling, the organisation's spokesman, has stated that buy using such systems, providers will be able to reach "the goal that they are always trying to achieve" of offering a price that reflects the actual risk.
He went on to explain how several companies are already using technology in 'pay-as-you-go' car insurance products.
"You can ask to have a black box fitted to your vehicle, and it enables your insurance to be on a pay as you drive basis," the expert outlined.
"It records your mileage and, importantly, where you're driving. It's a method of effectively ensuring your premium reflects risk."
According to research by MoneyExpert, the average car insurance premium in the UK has risen by six per cent in the past year.
The same study predicts that a ten per cent rise is to follow across 2008.
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