Car insurance is undergoing a significant overhaul, impacting buyers of brand new cars registered after a specific date. The conventional group ratings for new cars are being replaced by a new scheme known as “vehicle risk rating,” which was implemented for cars registered after August 1, 2024. This new system assesses cars based on five risk areas: performance, damageability, repairability, safety, and security. Unlike the previous group rating system set at the car’s launch, the “vehicle risk rating” can fluctuate over time, influencing insurance costs.
The Chief Executive of Thatcham Research, Jonathan Hewett, emphasised how new technology is reshaping the motor insurance model, shifting the risk from the driver to the vehicle. This change prompted the development of a more precise assessment of vehicle risks through the new rating system. Thatcham Research awards a score between 1 and 99 for each of the five risk categories, focusing on aspects like vehicle characteristics, repair costs, safety systems, and security measures.
Particularly notable is the “repairability” category, as repair costs have surged, with electric vehicles proving more costly and time-consuming to repair than petrol cars. While the Vehicle Risk Rating system has recently been introduced, it will run alongside the existing Group Rating system for 18 months to allow insurers and manufacturers to adjust. Subsequently, the VRR system will become the primary reference for new cars moving forward.
The aim is to not only enable insurance companies to set premiums more accurately but also encourage manufacturers to consider insurance outcomes in their vehicle designs. The VRR system is designed to offer a detailed and comprehensive evaluation of vehicle risks, considering various factors beyond just the vehicle’s launch specifications. This shift reflects the evolving landscape of car technology and industry standards.
In conclusion, the overhaul in car insurance practices signifies a proactive response to the changing dynamics of vehicle technology and safety. By implementing a more flexible and detailed assessment system, both insurers and manufacturers can adapt to the evolving risks and demands of modern vehicles. This transition marks a significant step towards ensuring more precise and fair insurance costs for owners of new cars in the UK.