The UK's largest car insurer has extended the trial for its 'pay-as-you-drive' insurance scheme and signed a deal with Intec Telecom Systems to provide itemized monthly bills, the Independent has reported.

The insurer plans to increase the scheme to around 100,000 users by the end of 2006, after conducting trials involving around 5,000 UK motorists and 1,500 younger drivers over the past 18 months.

The scheme, if introduced, could mean a driver’s insurance bill is dependent on how much they drive. It operates using a global positioning system (GPS), which can be fitted into a car to track the amount of motoring the driver does, the data is then processed by the insurer to calculate an accurate premium for the driver, calculated through a cost-per-mile basis.

If it takes off, the scheme could prove appealing to low-mileage or occasional drivers who are currently charged the same rates as frequent, high-mileage drivers.

Norwich Union has not given a release date for the scheme into the mass market.