Norwich Union, the UK's largest motor insurer, has signed a deal with IBM and Orange to provide the technology for its new "pay as you drive" insurance policy, set to launch in the summer.
The testing is set to begin in the summer with 5,000 volunteer policyholders. Data will be collected from a "black box" in volunteer's cars and the insurance premium will be calculated based on car usage.
Under the proposed "pay as you drive" insurance, motorists could be advised of the safest routes and be rewarded for avoiding accident black spots.
Norwich Union's sales and marketing manager, Doug Vallgren, said this method of motor insurance would also appeal to drivers who record low mileage.
He said: "This could also attract high-mileage drivers if they avoided busy city centres or drove at off-peak hours."
Norwich Union said it would take 12 to 18 months to complete the trial, which would involve combining the system with the insurer's roadside breakdown service.
