New pay-how-you-drive policies introduced by Britain's biggest insurers reward motorists aged between 17 and 25 with good driving behaviour, which is evaluated with satellite-tracking technology.

The system provides affordable level of insurance to sensible drivers by monitoring how and when they drive, potentially cutting premiums that they have seem rising by up to 50% during the last six months.

Insurer Aviva introduced a similar concept in 2006 to then drop it due its elevated cost, but now the devices are cheaper and more sophisticated. Insure The Box has been the company that pioneered the product that now the Co-operative is also offering.

David Neave, Director of General Insurance at The Co-operative Insurance, said: "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."

According to the Co-op, the new product will be £328 cheaper than competitor prices on average. The firm claims 82% of young drivers could make a saving with it.

The so-called “spy in the car” uses GPS-tracking similar to that used in satnavs. The monitored parameters are: number of journeys undertaken, types of roads driven on, speeds, time of day travelled at, cornering, acceleration and braking.

Insure The Box's policyholders are charged by the mile, initially paying for 6,000. According to their needs they could buy more miles or been rewarded with “free miles” if they drive safely.

The Co-op insurance policy works in a similar way. Motorists are assessed every 90 days based on factors measured by the smartbox. If the driving is safe part of the initial premium is refunded, otherwise it could go up.

Leaving aside the economic factor, the smartbox also aims to improve driving by giving advice on what young drivers are doing wrong.

Julie Townsend, Director of Campaigns at road safety charity Brake, said: "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.".