It was recently announced that following 18 months of research, Thatcham Research is going to replace the traditional insurance group ratings with a Vehicle Risk Rating (VRR) system. They describe this as ‘a more advanced and dynamic five-assessment-based Vehicle Risk Rating model’.
The five factors VRR will assess are:
- Performance
- Damageability
- Repairability
- Safety
- Security
By offering scores from 1 (low risk) to 99 (high risk) based on real-world claims data, this system can provide an overall insurance risk score that will influence the cost of an insurance premium. Vehicle Risk Ratings can go up or down over time, which will have an impact on insurance costs.
This new system came into effect for new cars registered after 1 August 2024. Cars registered before 1 August 2024 will continue to use the group rating system.
Why are insurance groups being replaced?
The traditional insurance group ratings from 1 to 50 have been in use for over 25 years (these replaced the 1 to 10 rating that was used previously) but advancements in technology and software in vehicle production have encouraged Thatcham Research to overhaul the system, now rating a vehicle’s risk on 125 different attributes.
New materials and manufacturing techniques have also played a role in the change over to VRR, as has the increased connectivity of many vehicles (which presents challenges when it comes to cybersecurity and data privacy). These changes in vehicle security have shown some elements of risk moving over from the driver to the vehicle, meaning measurements and definitions of risk have had to change.
Rating vehicles from 1 to 99 will provide a more advanced, dynamic and granular system that can evaluate the risk factor of more cars more closely. These new ratings will not be directly comparable to insurance groups (e.g. a VRR rating of 40 will not be the equivalent of insurance group 20). Instead, they aim to provide a more comprehensive and accurate assessment of a vehicle’s insurability.
The vehicle evaluations are due to be carried out in Thatcham’s research facilities in Berkshire and Nottinghamshire.
How will the new vehicle risk rating system work?
The vehicle risk rating system aims to provide more insight into car insurability and costs by assessing the five factors mentioned above, with Repairability especially contributing strongly to an overall score.
- Performance – This factor takes into account the top speed, acceleration, list price, drivetrains and power systems of each vehicle.
- Damageability – The design of the vehicle, the materials it’s made from and the construction techniques used will all affect the risk of a vehicle and what its risk rating will be.
- Repairability – A huge factor on insurance risk and the overall VRR score, this assessment examines how easy it is to repair any damage. It factors in costs of parts and the latest technological developments.
- Safety – Analysis of crash avoidance systems and other active and passive elements.
- Security – The New Vehicle Security Assessment (NVSA) will measure the physical and digital systems and tech designed to protect the vehicle from theft and unauthorised access.
What impact will VRR have on my premium?
The vehicle risk rating system should give drivers and buyers more transparency and idea of how much an insurance premium could cost on their next vehicle. This will come in useful when you’re looking to buy a car or even sell a car, as it will help factor in additional costs on top of the vehicle price.
Vehicles with higher VRR ratings (closer to 99) will tend to have higher premiums, while those with a lower number (closer to 1) should cost less to insure.
What happens next?
The new Vehicle Risk Rating model will run in tandem with existing insurance group ratings for 18 months. After this time, Thatcham Research hopes to have enough data to apply more specific VRR ratings to newly manufactured vehicles. Cars with an existing insurance group will continue to do so.
With a focus on advancements, sustainable repairs and emerging theft trends, the new vehicle risk rating model should help both insurers and drivers know what to expect when it comes to getting a quote – including for temporary car insurance.
Frequently Asked Questions
What is Thatcham Research?
Thatcham Research is the automotive-backed insurance group, whose info is relied upon by brokers, price comparison websites and insurers to calculate premiums. They do this by combining these factors with traditional driver aspects, such as claims history.
Sources:
https://www.thatcham.org/pf/vehicle-risk-rating/
https://www.fleetnews.co.uk/news/new-vehicle-risk-rating-model-launched-to-help-insurers
