RE: Thatcham introduces new Vehicle Risk Rating

RE: Thatcham introduces new Vehicle Risk Rating

Friday 27th September

Thatcham introduces new Vehicle Risk Rating

It's out with insurance groups and in with five insurability assessments - including Repairability


The days of the insurance group are done. Though the 20-group system was upgraded to 50 a few years back, it’s now been decided that an entirely new approach is needed to properly assess vehicle risk in an ever-changing environment. Thatcham Research’s new regime will see the 1-50 model replaced with five insurability assessments to give a Vehicle Risk Rating; it will also be changeable over the life of a car as risk factors evolve, rather than a static rating as before. Where previously historical experience could be used to assess a vehicle, that’s no longer possible with the advent of so many new cars and technologies.

The five assessments are Performance, Damageability, Repairability, Safety and Security. All broadly familiar criteria for making an insurance assessment beforehand - faster, more exotic car will cost more to cover than cheaper, more utilitarian one - only now going into additional depth, with each assessment being scored from 1-99. Thatcham says this will mean ‘more accurate, individualised insurance premiums for consumers.’

The change reflects how vehicle tech is evolving, with features such as ADAS contributing to the Safety rating, the cost of materials used to make a car factored into the Damageability score and Repairability having to take into account things like powerplant. According to Thatcham’s research - and backed up by masses of anecdotal evidence - EVs are 25 per cent more expensive to fix than petrol equivalents, for example, partly through taking 14 per cent longer to fix. The old way isn’t really fit for purpose any more, it would seem. Not when insurers are paying out more than ever - £2.9bn for Q2 was an 18 per cent increase on the £2.5bn for the same time last year - and so presumably the accuracy of this VRR approach will benefit them also. 

The Vehicle Risk Rating is said to have been a year and a half in the making, evaluating over 1,300 data points from 25,000 vehicles derivatives to give the best possible big picture of insurability. Its implementation will take just as long, the VRR running alongside the group system for the next 18 months to allow for adjustment. 

Jonathan Hewett, Thatcham Chief Exec, said: "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. This will not only help insurers price premiums more accurately but also encourage manufacturers to consider insurance outcomes when designing vehicles and implementing technologies.”

Imagine that - an emphasis on simpler, lighter, cheaper-to-insure and easier-to-repair cars doesn’t sound like a bad idea at all. 


Author
Discussion

pjksutherland

Original Poster:

27 posts

152 months

Hopefully simpler, easier to repair cars made of less expensive parts will be cheaper to insure, however the cynic in me wonders if these kind of cars will cost as much to insure as they do now and this system will just push up the insurance costs of other cars that don't meet this criteria!

Greedydog

913 posts

200 months

Whilst vehicle complexity, performance etc. obviously plays a part in the risk assessment and will drive other costs to a certain degree, I’d like to know what percentage of insurance payouts actually relate to the vehicle and what relate to everything else such as costs generated by accident management companies etc.

Olivergt

1,537 posts

86 months

Greedydog said:
Whilst vehicle complexity, performance etc. obviously plays a part in the risk assessment and will drive other costs to a certain degree, I’d like to know what percentage of insurance payouts actually relate to the vehicle and what relate to everything else such as costs generated by accident management companies etc.
Yes, would be interesting to get a breakdown of what the insurance companies pay out on.

Personal Injury
Other 3rd party payments
Hire Car costs
Vehicle repairs
Other

They must know these figures and are more than likely trying to reduce whichever is the highest already.

Whydoyoutalkcrap

200 posts

218 months

I really hope they will take into account the dangers of touch screen controls and the issues of manufacturers moving to touch screens without apparently any real use testing! Some of the more recent ones I have tried (hang your heads VW) are scary!

DanielSan

19,087 posts

172 months

Insurance companies just do whatever the hell they want anyway. This is a new way for them to make up numbers nothing more.

HocusPocus

1,065 posts

106 months

The actuaries will already be crunching the loss ratios and data models to price risk. So this will just be refining the pricing model.

Terminator X

15,902 posts

209 months

"EVs are 25 per cent more expensive to fix than petrol equivalents"

How dare you suggest such a thing mad

TX.

Evolved

3,623 posts

192 months

Terminator X said:
"EVs are 25 per cent more expensive to fix than petrol equivalents"

How dare you suggest such a thing mad

TX.
That figure seems far too low! I’d have wagered nearer 40-50%.

T1berious

2,345 posts

160 months

Vehicle hire for the period of the repair is often more expensive than the repair.

I'm no expert on insurance but it "seems" the minute an "insurance job" comes in, all the related costs go up 50% and approved repair centers just rub their hands.

Happy to be wrong on this.

A new system sounds like a great way for insurance companies to claw back lost profits.

Maybe I'm being too cynical.

FA57REN

1,067 posts

60 months

Olivergt said:
Yes, would be interesting to get a breakdown of what the insurance companies pay out on.

Personal Injury
Other 3rd party payments
Hire Car costs
Vehicle repairs
Other
About 60% property ( first & third party, auto and real estate ) repair, 30% injury and 10% other overall. But a single serious injury case can run into the millions, far beyond any individual property payout.

CaptainPedantic

47 posts

193 months

That vehicle positioning in picture one is truly appalling. That driver needs to sort it out.

Square Leg

14,837 posts

194 months

CaptainPedantic said:
That vehicle positioning in picture one is truly appalling. That driver needs to sort it out.
The driver is just using the touch screen…

Mikebentley

6,502 posts

145 months

It’s just another tool that the insurance companies will use to maximise their profits. They will now be able to demonstrate they are trying to adapt to answer consumer concerns over increasing policy prices. What they should be doing is stopping excessive hire car costs and the using of third party claims companies which just add another layer of cost into claims. I would happily accept a reduced premium if offered for signing terms and conditions saying I couldn’t use these third party claim processing companies.

DonkeyApple

57,823 posts

174 months

Evolved said:
That figure seems far too low! I’d have wagered nearer 40-50%.
Probably softened by the cost of hire cars along with not all repairs being much more than paint etc.

If you just bend a wing and break a light the costs are going to be on par. It's when things like the skateboard are bent etc.

The big issue with some EVs ie Tesla has been that they simply haven't set up any efficient parts service which they'll now have to consider doing.

TooLateForAName

4,818 posts

189 months

Seems reasonable. I've always thought that this fuss about mega castings for manufacture is a daft idea for repairability.

bristolracer

5,610 posts

154 months

So the cost of insurance will
1) Go down
2) Stay the same
3) Go up
?

scratchchin

foggy

1,170 posts

287 months

bristolracer said:
So the cost of insurance will
1) Go down
2) Stay the same
3) Go up
?

scratchchin
As the last line of the CEO quote mentions, risk rating is about attempting to influence vehicle manufacturers and car design. Insurers have a business strategy and plenty of data of their own on vehicles and drivers to define what pricing they want to offer, hence why they vary so much.

Clivey

5,210 posts

209 months

DonkeyApple said:
Evolved said:
That figure seems far too low! I’d have wagered nearer 40-50%.
Probably softened by the cost of hire cars along with not all repairs being much more than paint etc.

If you just bend a wing and break a light the costs are going to be on par. It's when things like the skateboard are bent etc.

The big issue with some EVs ie Tesla has been that they simply haven't set up any efficient parts service which they'll now have to consider doing.
A friend of mine works for an insurance-approved repair centre. When an EV comes in, it takes-up 11, yes eleven, spaces in the yard because their policy is to leave 5 spaces each side in case of a battery fire. The insurance company then gets charged for all 11 spaces for the duration. The alternative is to build revetments like at an air base to try to prevent one spontaneously-combusting EV from taking-out the whole premises.

The problem re. damaged EV battery fires is serious enough that portable sensor systems are being developed to watch over them and detect thermal runaway, gas venting etc. as it begins to happen. These packs can be especially dangerous because the casing can look perfectly fine and they can be sitting for weeks before they suddenly combust with little-to-no-warning. Though I don't work in accident repair, I've personally faced a lithium battery fire in a workshop and it's something I never, ever want to repeat again.

I know this isn't an apples-to-apples comparison because it lacks an EV-style BMS but I actually have a Li-Ion car jump starter / power bank sitting in the fire pit in my back garden right now. It was sitting on a shelf for months but one day I walked past and noticed that at least one cell had swollen to the point it'd burst the plastic casing of the power bank itself!

big_rob_sydney

3,465 posts

199 months

Yesterday (04:45)
quotequote all
The cynic in me think this is just another way to screw more money out of consumers.

MikeM6

5,185 posts

107 months

Yesterday (05:00)
quotequote all
All I can see from this is that anything interesting will become more expensive to insure, including older cars which pre-date driver aids.

It seems to link NCAP ratings more closely to insurance cost.