Car Insurance Groups To Be Replaced by New Vehicle Risk Ratings

The long-established car insurance group rating system is being replaced by a new scheme that assesses new cars based on five core characteristics: performance, damageability, repairability, safety, and security.

Under the new system, all cars going on sale in the UK since 1 August this year are awarded Vehicle Risk Ratings across each of these five categories. The aim is to enable insurers to provide a more detailed risk assessment, particularly given the increasing complexity of modern vehicles and their associated technologies. It is also hoped that consumers will gain a clearer understanding of how individual models perform in key areas. Similar to the Euro NCAP safety programme, the focus on these areas is expected to encourage manufacturers to improve aspects where their models may be less competitive.

The shift to this system is seen as necessary in light of the fast-evolving nature of vehicle technology. Traditional methods of determining premiums, which relied on historical vehicle and driver data, are no longer sufficient. Today’s environment requires a deeper understanding of how new technologies impact accident frequency, the effectiveness of modern security features in countering criminal activity, and the challenges posed by electrification and advanced vehicle structures, particularly concerning sustainable repairs.

The new rating system is expected to benefit consumers by aligning car insurance with other consumer products that break down risk into individual components. This approach allows buyers to compare vehicles based on specific factors, much like how one might compare a mobile phone based on features like screen resolution or battery life.

Alongside the five individual scores, a single overall Vehicle Risk Rating will be provided. Insurers can use this to generate quotes for the next two years while systems currently reliant on the old 2-digit Group Ratings are updated. After this period, insurers and related systems will be fully integrated with the five-category Vehicle Risk Ratings, leading to policies and premiums that reflect a broader range of vehicle characteristics.

It is important to note that the 2-digit Vehicle Risk Ratings used during this transitional period should not be compared with the previous group ratings. Vehicles sold before 1 August will retain their original group ratings, and the new assessments will not be applied retrospectively. The plan is for the five pillar scores to be recognised by car manufacturers, the government, insurers, and consumers after the two-year transition period.

Here are the core five Vehicle Risk Ratings

• Performance – Evaluates vehicle characteristics such as speed, acceleration, and the impact of modern powertrains.
• Damageability – Assesses how design, materials, and construction influence repair costs and damage severity.
• Repairability – Focuses on the ease and cost of repairs, encouraging repair-friendly vehicle designs.
• Safety – Analyses active and passive safety systems, including crash avoidance features.
• Security – Examines physical and digital security measures, leveraging Thatcham Research’s New Vehicle Security Assessment expertise.