YOUNG drivers are to be offered cheaper insurance if they agree to have a speed-monitoring device that records every occasion they break the limit installed in their cars.

The device, which uses a satellite tracking system combined with a digital map of speed limits, measures the vehicle’s speed every eight seconds and checks it against the local limit.

The information is transmitted to the insurer, which will issue warning letters if a driver persistently exceeds the limit. The scheme uses the “three strikes and out” principle, with cover withdrawn when a driver triggers a third warning letter.

Drivers who agree to install the device, which is the size of a video cassette, will receive a discount of 40 per cent on their insurance. Teenage drivers will save an average of £400 a year.

The Association of British Insurers has identified speeding as a major factor behind the higher death rate among young drivers. The number of deaths on Britain’s roads fell by 8 per cent last year but rose 12 per cent for 16-19 year-old drivers and passengers.

Teenage drivers are ten times more likely to be killed or injured while driving than motorists in their 40s. More than 2,000 male drivers aged 17-25 have joined such a speed-monitoring scheme in the Republic of Ireland.

Celtrak, the company which supplies the technology, said that drivers who had the device were 20 per cent less likely to make insurance claims than comparable drivers. The safety benefits have prompted magistrates in the Republic to order young drivers to join the scheme as a condition of keeping their licences.

Celtrak has now joined forces with an insurance company to offer the scheme in Britain. It plans to recruit 500 volunteers by the end of next month and to offer the device to any young driver aged 18-25 from early next year.

Oliver Heaney, business development manager for Cel-trak, said that some drivers were initially wary about having “big brother” on board, checking their speed. “But we make clear that this is not a stick to beat drivers with but a tool to help them be safer,” he said. “If you monitor something it behaves itself. It’s like when a teacher walks out of the classroom — the kids go mad.”

The scheme permits a certain level of speeding and penalises only those drivers who persistently exceed the limit.

Drivers receive a monthly account of their driving behaviour, including the proportion of time they have broken the limit and any serious breaches. Celtrak refused to reveal how much flexibility drivers were given to speed, saying that this was commercially sensitive.

Mr Heaney said that the first 11 seconds of any instance of speeding were ignored to allow for overtaking. “We recognise that people will still break the speed limit,” he said. “Because we look at the average speed over a month, even if you break the limit one day, that can be filtered out over the next few weeks.”

The device also emits a short single bleep when the vehicle accelerates past 30mph and a long single bleep above 70mph.

David Fitzgerald, 25, a paramedic from Portlaoise, in Co Laois, said his insurance premium more than halved when he joined the scheme. “It made me think much more carefully about my speed as well as making it possible for me to afford to run a car,” he said.

The scheme is offered by AXA in the Republic but will be introduced by another leading insurer in Britain. Mr Heaney said: “I can’t yet reveal which insurance company will offer it in Britain because they are worried about frightening their existing customers.”