By Larry Haverkamp

PAYING annual car insurance premiums may be a thing of the past. The future may be "pay as you drive" (Payd).

In the scheme, you have to install a device on your car that monitors how far you drive each day, the speed at which you drive and even how hard you step on the brakes.

It means you will pay for car insurance per kilometre instead of per year. Infrequent drivers will no longer end up subsidising those who drive alot.

A study by the Brookings Institution in the US estimates the scheme would lower premiums for two-thirds of households.

Payd is already in use by two large US car insurers, Progressive and GMAC, where it has lowered premiums by up to 60 per cent.