Norwich Union's (NU) pay-as-you-drive pilot reduced claims frequency for young drivers by 20%.

The scheme, which was rolled this week, will see two new products, one aimed at young drivers aged 18-23 the other at motorists up to 65 years old. The company expects to save policyholders around a third in motor premiums and reduce the number of accidents.

But despite the positive impact on claims, the insurer said the scheme would not impact the performance of its private motor book as a whole. In the first half of 2006, NU reported an underwriting loss of £33m on its private car book.

The company recently announced that it would hike motor premiums by up to 40% for some drivers.

The pay-as-you-drive pilot scheme began in 2004 and clocked up 100 million journey miles with 5,000 motorists; including 1,500 young drivers aged 18-23. The young driver pilot was launched last year.

Meanwhile, Royal & SunAlliance (R&SA) is piloting a young drivers policy with broker ProtectaGroup that will slash premiums by up to 40%.

The insurer is launching the scheme with 500 policyholders in Wales aged 17-25 years old over the forthcoming months.

An i-Kube box, which uses telematics technology, will be fitted to the car and monitor when it is used. A £45 fee will be charged, 'to reflect the risk', if it is used between 11pm and 5am. This is the most likely time when they will have a road accident, according to the insurer.

Danny Venner, broker business manager at R&SA, said: "We wanted to see what we could do for young drivers, offer reasonable prices and work to reduce the number of accidents."

He said the money saved by potentially lower claims cost would be reflected in the discounted premiums.