Under the scheme, which launches today, drivers between the ages of 17 and 25 would have their motoring skills monitored by the small box fitted to their car.
They will be rewarded for good driving with lower insurance premiums by adhering to a range of different criteria, including not driving as so-called “dangerous” times between 11pm and 6am.
The age group is among the hardest hit by higher motor insurance costs, having seen their premiums rise on average by 58 per cent to more than £2,200 in the past year.
Motorists have been warned that they are likely to suffer even higher costs after the European Court of Justice ruled that companies cannot use gender to set insurance premiums which will penalise young women drivers.
Young drivers who sign up to the deal offered by Co-operative Insurance will also be assessed on their braking and acceleration, cornering and speed.
The information will be transmitted by the Smartbox back to the insurer’s data systems.
But while good drivers will benefit from a discount on future payments or a refund, the insurer warned that bad drivers will see their insurance costs increase, by a maximum of 20 per cent on their initial payment.
However, it suggested the scheme was unlikely to attract ‘boy racing drivers’ who would not want a Smartbox fitted to their cars.
David Neave, director of general insurance at The Co-operative Insurance, said: “It is a fact that many young people are simply being priced out of owning a car due to the escalating cost of motor insurance for young drivers. To ensure we do not end up with an entire generation priced out of car ownership we are giving them a chance to prove themselves as responsible drivers, and dispel the assumption that all young drivers will drive badly and have accidents.”
The policy will be cancelled by the insurer if drivers go so far above the speed limit that a driving ban is imposed by the courts.
Figures show that almost 3,000 people are killed on Britain’s roads every year and a further 245,000 are injured.
Julie Townsend, director of Campaigns at road safety charity Brake, said: “As a charity that cares for bereaved and injured crash victims, we welcome this new approach to encouraging young drivers to keep themselves and others safe.
“Young drivers are involved in a shockingly high proportion of deaths and serious injuries on our roads, causing trauma and heartbreak to many families every day – and it’s this high level of risk that pushes up their insurance costs. Persuading young drivers to make safer choices, like slowing down and avoiding night-time driving, is vital in preventing more lives being needlessly cut short on our roads.”
Here is how it works: The size of an ipod but slightly thicker, the black Smartbox fits snuggly into your palm. It needs to be fitted by an engineer, who is called out once you have signed up to the Co-operative deal.It is fitted out of sight so not to attract thieves. Options include fitting it under the dashboard or bonnet, depending on the make of the car.It is wired into the electrics of the car to make use of the power source.It picks up signals from satellites to identify its position, while the box itself measures wirelessly the acceleration and cornering speeds.The information is transmitted back to the Co-operative via what is essentially a mobile phone signal.