A major revamp of the current Group Rating insurance assessment model could deliver cheaper premiums for fleets and consumers opting for safer and more secure vehicles.
Thatcham Research is introducing a new Vehicle Risk Rating (VRR) system that will replace the current Group Rating framework for cars and vans to give real-world insights into ‘insurability’.
The existing Group Rating model, which Thatcham Research has administered for over 25 years, categorises vehicles by an insurance group from 1-50, with vehicles in insurance group 1 being the cheapest to insure and those in group 50 the most expensive. This static rating information is used by brokers, price comparison websites and insurers, which is then married with traditional driver specific aspects, such as claims history, allowing insurers to calculate premiums.
The new dynamic model, officially launching today (24 September 2024), replaces this with five ‘insurability’ assessments, offering the insurance industry a more comprehensive view of vehicle risk.
Running alongside the existing Group Rating system for the next 18 months until it takes the lead, the Vehicle Risk Rating system uses market performance data, collected in collaboration with vehicle insurers, to account for dynamic factors. These include advancements in technology, an increased focus on sustainable repair and emerging theft trends. This offers insurers more “granular” insights into vehicle risks while supporting Thatcham Research’s work to enhance safe, secure and sustainable mobility.
At the heart of the new system is a five-assessment framework that covers everything from performance and safety, to damageability, repairability and safety.
Each of these assessments is scored on a scale of 1 to 99, offering insurers a more granular understanding of vehicle risks and enabling more accurate, individualised insurance premiums for consumers.
Thatcham Research said the new system would not only help insurers price premiums more accurately but also encourage manufacturers to consider insurance outcomes when designing vehicles and implementing technologies.
Jonathan Hewett, chief executive, explained: “Until relatively recently, insurers could rely on their historical experience of vehicle types, combined with driver data, to determine premiums. This is no longer viable in today’s fast-paced environment where it’s important to understand the influence of rapidly developing ADAS on accident frequency and severity, the impact of new security technology in staying ahead of the criminal gangs and the challenges electrification and new vehicle structures present to sustainable repair.
“In a technology driven world, research- and vehicle-focused assessments are vital to informing this process, enabling insurers and their partners to see the road ahead with absolute clarity and confidence.”
Insurers say the new system will provide transparency to manufacturers, allowing them to design and build more insurable vehicles.
By evaluating a vehicle’s ‘reparability’ – efficient, cost-effective vehicle repairs and prompt return to service post-collision – the ratings will heavily influence insurance risk and, therefore, costs. Thatcham says the significant weight of the repairability assessment in the VRR score encourages vehicle designs and technologies that facilitate straightforward and economical repairs.
This could help counter rising insurance costs. The Association of British Insurers (ABI) recently reported that in the previous 12 months, insurers paid out £2.9bn in motor insurance claims – up 18% from the same point the year before.
And the new ‘reparability’ criterion could particularly influence future EV design. Thatcham Research stated last year that electric vehicles are approximately 25% more expensive to repair than their petrol equivalents and take 14% longer to fix.
“Repairability is increasingly vital in the modern automotive era,” added Thatcham’s Jonathan Hewett. “Without a keen focus on sustainable repair at the design stage and vehicle launch, where parts supply and readily available repair methods are key, the industry’s environmental endeavours are at risk of being undermined by vehicles that become disposable too early into their use phase.”
More details of the Vehicle Risk Rating system and its benefits are here.
