Thatcham Research is introducing a new Vehicle Risk Rating (VRR) model designed to help insurers better manage the evolving risks posed by modern vehicles.
This advanced model is designed to provide a more accurate and comprehensive assessment of vehicle risks, replacing the longstanding Group Rating system that has been in place for over 25 years. The VRR system will offer insurers dynamic, real-time data to keep pace with the rapidly evolving automotive landscape, driven by advancements in electric vehicles (EVs), safety technology, and changing security threats.
The traditional Group Rating system, based on a static scale of 1-50, has long been used by brokers, insurers, and price comparison websites to calculate vehicle premiums. However, the model’s fixed nature meant it could not adequately address the emerging risks posed by modern vehicles. As automotive technology has rapidly progressed, particularly with the rise of advanced driver assistance systems (ADAS), electric vehicles, and software-driven functions, the need for a more adaptive risk assessment model has become clear. Thatcham Research, in collaboration with the motor insurance industry, responded to this challenge by developing the VRR system.
The Vehicle Risk Rating model is built on five key assessments: performance, damageability, repairability, safety, and security. Each of these categories offers a detailed evaluation of different aspects of a vehicle’s risk profile. The “performance” assessment considers factors like speed, acceleration, and the influence of new powertrains, including electric motors. “Damageability” focuses on the vehicle’s design and materials, determining how vulnerable the car is to damage and how expensive repairs might be. “Repairability” looks at the ease and cost of repairing a vehicle, with an emphasis on creating repair-friendly designs. The “safety” assessment evaluates both active and passive safety systems, including crash-avoidance features, while “security” examines the vehicle’s physical and digital defenses against theft and other criminal activities.
Each assessment is scored on a scale of 1 to 99, allowing insurers to generate a much more detailed understanding of a vehicle’s risk profile. This scoring system will enable insurers to set premiums with greater precision while also providing vehicle manufacturers with clear insights into how their design choices influence insurability.
Thatcham’s new system introduces a dynamic element to vehicle risk assessments. Unlike the static ratings provided at vehicle launch under the old system, the VRR model will offer ongoing updates that reflect real-time changes in vehicle risk. This flexibility is especially important as vehicle technology evolves, ensuring that insurers can adapt quickly to new risks, such as the growing complexity of ADAS or the specific repair challenges posed by EVs.
The development of the VRR system was a collaborative effort involving an 18-month study that analyzed over 1,300 data points from 25,000 different vehicle models. This data-driven approach ensures that the new system is grounded in real-world information, providing a reliable foundation for assessing insurability.
One of the most significant innovations within the VRR model is the emphasis on repairability. With repair costs rising sharply—28% higher than in previous years, according to the Association of British Insurers (ABI)—and the complexity of EV repairs adding further strain on insurers, this category has become crucial. Thatcham’s new model aims to encourage manufacturers to prioritize designs that support efficient and sustainable repairs, thereby reducing insurance costs and environmental impact.
Thatcham Research officially launched the VRR system on September 24, 2024, and the industry will enter an 18-month dual-rating period where both the new VRR and the existing Group Rating systems will be applied. This transition phase will provide insurers and manufacturers with time to adjust before VRR becomes the sole standard for vehicle risk assessment.
Source: thatcham.org