Insurance and telematics: How's my driving? SURVEYS routinely find that around 80% of drivers think of themselves as being of "above average" ability. Sadly for them - and happily for common sense - their insurers do not take such claims on faith. Underwriters have traditionally used crude demographic data such as age, location and sex to separate the testosterone-fuelled boy racers from their often tamer female counterparts. Now technology is giving insurers the chance to see just how skilled a driver really is. By monitoring their customers" motoring habits, underwriters can increasingly distinguish between drivers who are safe on the road from those who merely seem safe on paper. Many think that "telematics insurance" will become the industry norm. Most variants of this model rely on a simple device in the car that beams data back to the insurance company. Other schemes, like one operated by Aviva, a British insurer, rely on smartphone apps downloaded by customers. In America, the focus is on how much time a car spends on the road, or "pay-as-you-drive." Europe, where Britain and Italy lead the field, has typically emphasised driver ability ("pay-how-you-drive"), tallying how often brakes are slammed or corners taken on two wheels. Some devices include location-tracking options that can figure out if, say, a car is doing 80mph in a 50mph zone. The reward for prospective customers can be a discount ranging from 10% to 40% off a standard rate. The drivers most likely to benefit are those the standard insurance market is overpricing because of their age or other factors, says Mike Brockman of insurethebox, a British underwriter. Last month the firm launched "Drive Like a Girl," a service that goads young drivers into safer motoring with the lure of cheaper car insurance. The spur was a recent EU court ruling that bars insurers from discriminating on the basis of sex. This forces young women to pay more, since they are shoved into the same underwriting pool as crash-prone young men. With telematics, however, women can demonstrate that they really are safer drivers, and receive a discount. So can some men. "You don't need to be a girl to drive like one," Mr Brockman says. The rewards for insurance companies could be even greater. They get to cherry-pick their customers based on data, not crude assumptions. "We have a way of actually identifying better drivers," says Dave Pratt, general manager of the telematics division at Progressive, an American underwriter. That is a huge advantage. The firm says a third of new business comes via its telematics scheme. The hefty discount it offers to the best drivers still leaves it with plenty of margin. More important, it avoids insuring the expensive car-wreckers of the future. By granting lousy drivers no rebate, it nudges them to buy insurance elsewhere. A side benefit is that insurers can more easily identify scams - if a costly whiplash claim is submitted for what was in fact a small bump, for example. This has driven growth in the Italian market, says Frederic Bruneteau of Ptolemus, a consultancy. Some also hail telematics as a way of improving driving standards, by making drivers more aware of when they are behaving dangerously. Black boxes can be made to beep when a car brakes too heavily, for example. They can alert emergency services after a crash, too. But customers (and some regulators) also worry about the privacy implications of tracking drivers. Progressive no longer monitors cars" location for fear of appearing Big Brotherish. Its gizmos only stay plugged in for six months to establish a snapshot of driving frequency and style, after which the discount is permanent. Despite such concerns, the market is growing quickly. Customers like personalised discounts. And insurers crave any source of data that helps them sift those drivers who are above average from those who merely believe they are.