Thatcham Research has unveiled a transformative Vehicle Risk Rating (VRR) system designed to redefine how vehicle insurability is assessed in today’s rapidly evolving automotive landscape. This new system, developed in collaboration with the motor insurance industry, replaces the long-standing Group Rating model for over 25 years, providing a more dynamic and precise approach to vehicle risk evaluation.
Insurers, brokers, and price comparison websites have long relied on the traditional Group Rating model to offer standardized insight into vehicle insurability. By analyzing vehicle characteristics alongside driver-specific factors like claims history, this system helps insurers set premiums. However, as EVs, advanced driver assistance systems (ADAS), and connected car technologies become more prevalent, Thatcham Research recognized the need to update this approach to more accurately reflect the risks of modern vehicles.
The new VRR system uses real-world market performance data collected with insurers to assess vehicle risks, accounting for current technological advancements, trends in sustainable repairs, and the rise of vehicle theft. Thatcham Research aims for the VRR to provide insurers with more granular, data-driven insights, helping them stay ahead of vehicle design and performance changes and ultimately ensuring safer and more sustainable mobility.
The VRR evaluates each vehicle across five core categories:
Each factor is scored on a scale of 1 to 99, giving insurers a more detailed and precise understanding of a vehicle’s risk profile. This data enables insurers to set more individualized consumer premiums based on the specific risks of each vehicle, a significant step forward from the previous model.
Thatcham Research conducted an 18-month study with member insurers, evaluating over 1,300 data points from 25,000 vehicle derivatives. This in-depth analysis, informed by insurer data, has ensured the VRR system reflects real-world insurability and adapts to the changing technological landscape.
Jonathan Hewett, CEO of Thatcham Research, highlighted how technology reshapes risk in motor insurance. “New technology is challenging the existing motor insurance model, prompting an unprecedented shift in the balance of risk from the driver to the vehicle. In response, we’ve worked closely with insurers, drawing upon cutting-edge data analysis to create a rating system that offers a more precise and detailed assessment of vehicle risks,” Hewett said.
He further noted how insurers, who once relied heavily on historical data and driver behavior, must now account for factors like ADAS, security technology, and the growing impact of electrification on repairs. As vehicles become more technologically advanced, these factors increasingly dictate accident frequency, repair costs, and theft risk.
Richard Birch, Chair of the Vehicle Risk Rating Panel and Technical Underwriting Manager at Saga, highlighted the shift. “Vehicle design and technology have undergone massive changes over the last 27 years. From powertrains to safety systems and materials, today’s vehicles are more complex than ever. The enhanced VRR system provides insurers with a far more accurate assessment, allowing them to underwrite policies more effectively.”
One of the standout features of the VRR system is its focus on repairability—the ability to fix a vehicle quickly and affordably after an accident. This factor plays a critical role in determining insurance risk and costs. The VRR system places significant weight on this metric, encouraging manufacturers to design easier and less expensive vehicles to repair, ultimately benefitting consumers.
According to the Association of British Insurers, motor insurance claims reached $3.6 billion in the second quarter of 2024, an 18% increase over the $3.1 billion paid out in Q2 of 2023. Repair costs accounted for $2.4 billion, a 28% increase. Thatcham Research has also noted that EVs are 25% more expensive to repair than petrol vehicles and take 14% longer to fix. These rising costs highlight the importance of designing vehicles with repairability to control insurance premiums and ensure that cars can be returned to the road quickly.
Hewett reinforced this view: “Repairability is increasingly vital in the modern automotive era. Without a focus on sustainable repair practices during the design phase, we risk undermining environmental progress. Vehicles that are too costly or complex to repair may end up being discarded far too early in their lifecycle, which runs counter to sustainability goals.”
The new VRR system officially launched on September 24, with an 18-month transition period during which the new VRR and the existing Group Rating system will be in place. This dual-rating period will allow insurers and manufacturers time to adjust to the new system before it becomes the sole reference for vehicle risk assessment.
