Tesco Bank, the financial services arm of the UK retail giant, has announced a new data-driven car insurance service that analyses driver behaviour to calculate policy prices.
The service, named Box Insurance, will be delivered in partnership with UK start-up Insure the Box, which launched back in 2010.
It works by installing a device – the box – in the driver's car. This records "telematics" data, i.e. information about the mechanical workings of the car.
That data is transmitted back to Insure the Box's data centre, where it is analysed to reveal the driver's behaviour. This includes how frequently and how fast they drive and how many breaks they take.
"All this information allows us to reward good driving with monthly 'bonus miles' and, at the end of year, to help calculate your renewal premium," Tesco explains on its website.
In a recent advisory note, the Association of British Insurers warned that companies should be transparent about how they plan to use drivers' data in order to win their trust.
"Maintaining consumer confidence in telematics products will be a key determinant of the long-term viability and success of the telematics market," it wrote. "Consumers need to trust insurers to treat them fairly and protect their personal information."
Tesco insists that it will "keep all your data, including driving data, safe and confidential. We will never share driving data with the police or other bodies without a court order or your consent, unless we suspect fraud".
Earlier this year, mobile operator Vodafone – an aspiring machine-to-machine (M2M) communications provider – launched a telematics-based platform for insurance companies, and signed up the European division of US insurance giant AIG as an advance customer.
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