A deal between Norwich Union, IBM, and Orange could change the face of motor insurance in the UK, with the introduction of a "pay-as-you-drive" insurance scheme later this year.
Based on telematic technology, the scheme uses a combination of GPS tracking and wireless communication to track where, when, and how often a vehicle is used. Detailed journey data will be used to calculate insurance premiums based on vehicle use - which could result in lower insurance costs for some drivers.
Norwich Union has mitigated some of the risk of the move through collaboration in both the technology and business design. The company has an exclusive agreement with insurance company Progressive, which pioneered a similar project in the US, to use its telematic technology and pricing scheme in Europe.
In the autumn 5,000 volunteers will have an electronic device fitted to their vehicles that will transmit voice and GPS tracking data to a central IBM server.
All voice and data communications will be transmitted over a secure network from mobile operator Orange.
The gateway is being developed using IBM's Websphere products.
Data security will be managed via Services Management Framework and Tivoli Device Agent Software. Data received through the gateway will be augmented with mapping data.
The system will also allow drivers to send and receive messages about insurance, routes and traffic problems via their mobile phones.
Douglas Vallgren, Norwich Union's marketing manager for telematics, said a dedicated team has been created within the company's IT department and new hardware to store and manage all the new incoming data will be added soon.
Norwich Union has a dedicated contract manager for the project who is working with IBM and automotive manufacturers to encourage the industry to have more telematic devices built into vehicles as standard.
John White, chairman of insurance industry consultancy Winchester White, said aligning IT with business goals is critical on such a leading-edge project.
"You must ensure that the business thinking gets ahead and stays ahead of the technological thinking. The functional model must be accurate so that the technology is not built around assumptions," he said.