Would you let an insurer track the way you drive for a potential reduction in your premium?

Motor insurer MSIG is rolling out a scheme that does just that, in a six-month pilot starting in March. By installing a telematics device linked to the car's global positioning system (GPS), the insurer is able to track how the vehicle is driven.

With that, it determines a premium that better reflects the risks involved with individual users. Safe drivers can expect a premium discount, but MSIG is not spelling this out yet. It merely pointed to a study showing most motorists could expect discounts of 6 to 20 per cent for such a device to be fitted in their cars.

On the other hand, drivers who are deemed "unsafe" can expect higher premiums. In the pilot with local technology firm CSE Group, MSIG will determine if such a scheme is feasible over the longer term.

MSIG Singapore senior vice-president of technical services Jeremy Lian said: "In this era of big data, the Internet of Things, people are used to getting real-time information and insights to other aspects of their lives, so why not when it comes to driving?

"Telematics can help them improve their driving and they may be rewarded for it... ultimately (it) makes our roads safer for everyone."

The telematics device tracks things like driving distance, speed and driving style such as cornering speeds and smoothness of acceleration and braking. Each journey is assessed and given a "driving score".

Transport consultant Gopinath Menon said the initiative is "a good idea, as it constantly reminds people to drive more carefully".

General Insurance Association executive director Derek Teo said: "Once you know you're being tracked, you become more conscious and are more socially responsible." He hopes more insurers will adopt similar initiatives, which "should promote safer driving".

Usage-based insurance or "pay as you drive" policies have been around for nearly 10 years now, but widespread acceptance by drivers is just beginning. In a recent study, Ernst and Young expects the global market penetration for usage- based insurance in Europe, Asia and America to hit 15 per cent by 2020 - up from just 1 per cent today.

As for privacy concerns, MSIG said data recorded will be collected by CSE, and "securely stored at its ISO 27001-compliant Metasat Data Centre". MSIG will not have access to participants' actual location data.