Car insurance is set to undergo a major overhaul for cars registered on a specific date, as reported by Wales Online. The new system, known as “vehicle risk rating,” will replace traditional insurance group ratings for new cars. This change will affect cars registered after August 1, 2024. Unlike the previous system, the new scheme assesses cars for five risk areas: performance, damageability, repairability, safety, and security. These categories will each receive a score between 1 and 99.
The vehicle risk rating can fluctuate over time, impacting the insurance costs of the car. This contrasts with the old group rating system, where costs were fixed at the car’s launch. The new approach aims to provide a more precise evaluation of vehicle risks, shifting the focus from driver risk to vehicle risk. The new criteria seek to incentivise manufacturers to consider insurance outcomes when designing vehicles.
Thatcham Research, the body behind the vehicle risk rating system, highlights the importance of factors such as repairability, safety systems, and security measures. The repairability category, in particular, significantly influences the overall vehicle risk rating score. The new system acknowledges the rising repair costs, stating that electric vehicles are more expensive to repair and take longer to fix compared to petrol cars.
While the vehicle risk rating system has been implemented, it will run alongside the existing group rating system for 18 months to allow insurers and manufacturers to adjust. Eventually, the vehicle risk rating system will become the sole reference for new cars thereafter. This transformation in how insurance costs are determined aims to offer a more accurate assessment of the risks associated with new vehicles, shaping insurance premiums more equitably.