BMW interior

BMW has announced the world's first factory-fitted telematics to offer drivers insurance premiums based on their usage.

The service will be part of BMW's connected drive technology, tracking distances travelled and providing users with a monthly mileage statement.

The partnership with Allianz UK and BMW will offer customers that drive up to 5,000 miles a year a 25% lower premium.

BMW will also offer BMW Car Insurance - Unlimited miles for drivers who travel further distances.

The announcement came after BMW suffered an embarassing network outage last month. UK customers were left unable to access BMW's ConnectedDrive, which connects mobile phones to their vehicle dashboard, as the service went offline following a data migration, BMW executives revealed.

BMW are just a step ahead of Fiat-Chrysler Group, who are working with Accenture to develop the next range of connected services for its Uconnect systems in the EMEA region this year.

Many telecommunications companies are offering UBI telematics as a service. Deutsche Telekom also announced a partnership with DriveFactor so motor insurers could offer their customers special benefits for driving safely last year.

Mobile operator O2 also offers O2 drive, a telematics service for enterprise that allows visibility of an entire fleet of vehicles, tracks mileage and monitors driver behaviour.

Mileage tracking may start to play a part in urban planning, a concept that is being considered by car manufacturers and telecommunication companies, Telefonica's automotive lead said.

At the CIO Summit in September 2013, CIO at LV=, Richard Warner, discussed the impact of the Internet of Things, telematics, and driverless cars on the insurance industry.