The car insurance landscape is undergoing a significant change, as the long-standing group rating system for new vehicles is being replaced by the new ‘Vehicle Risk Rating’ (VRR) framework.
From 1st August 2024, any vehicle registered will be assessed using this new VRR system. Unlike the previous method, which used fixed group ratings, the VRR evaluates vehicles based on five crucial risk categories: performance, damageability, repairability, safety, and security. Each vehicle will receive an individual score for each of these areas.
Thatcham Research, a leading authority in automotive risk analysis, has hailed the introduction of the VRR system as “a more detailed and adaptable approach to evaluating vehicle risk.”
What Sets the Vehicle Risk Rating Apart?
Under the old Group Rating system, cars were assigned a static score from 1 to 50 at the point of launch. This rating would remain unchanged throughout the vehicle’s lifespan. In contrast, the new VRR system allows for fluctuating ratings based on evolving data. This dynamic assessment means that insurance premiums may increase or decrease as a vehicle ages, depending on changes in risk factors.
The VRR system replaces the somewhat outdated group rating method but will only apply to cars registered after 1st August 2024. Vehicles registered before this date will continue to follow the existing group rating structure for the foreseeable future.
Jonathan Hewett, Chief Executive of Thatcham Research, stressed the importance of this new model:
“With advances in vehicle technology, the way we assess risk must also evolve. The VRR represents a fundamental shift, as we work closely with insurers to provide a more precise and in-depth analysis of vehicle risks, using cutting-edge data analytics.”
A More Transparent Approach for Consumers
The introduction of the VRR is expected to benefit drivers by offering them greater clarity when calculating insurance costs for different vehicles. The five risk categories, scored on a scale of 1 to 99, are:
- Performance – Evaluates key factors such as speed, acceleration, and the impact of modern engine technologies.
- Damageability – Considers how a vehicle’s design and materials affect the severity of damage and repair costs.
- Repairability – Focuses on the ease and cost-effectiveness of repairs, encouraging vehicle designs that allow for faster and more affordable fixes.
- Safety – Takes into account the presence of active and passive safety features, such as crash prevention technologies.
- Security – Assesses both physical security features and digital defences, based on Thatcham’s expertise in this area.
The ‘repairability’ factor is particularly significant. The Association of British Insurers (ABI) has reported a 28% rise in repair costs since 2023. Thatcham Research also highlighted that electric vehicles (EVs) are roughly 25% more expensive to repair than petrol models, and repairs take around 14% longer to complete.
Transition to the New System
Although the VRR system officially launched in August 2024, it will run alongside the traditional Group Rating method for an 18-month transition period. This will give insurers and manufacturers time to adjust before the VRR becomes the standard rating system for all new cars.
This new system offers a fantastic opportunity for drivers to make informed decisions when comparing car insurance. The Vehicle Risk Rating provides a clearer picture of how various factors impact your premiums. Interested in seeing how your vehicle’s rating could affect your insurance costs? Compare car insurance quotes now to find the best deals available for you!
The VRR system marks a shift towards a more flexible and accurate approach to evaluating car insurance costs. With insurance premiums potentially changing over time, it’s more important than ever to regularly review and compare quotes. Find out how much you could save by reviewing your insurance options today! Compare Car Insurance Quotes.