Car Insurance Due For Dramatic Overhaul

In a shocking move, car insurance is set to be replaced by a brand-new model and undergo a drastic overhaul. Instead of the traditional ratings for different types of groups in the world of car insurance, we will now see a brand-new vehicle risk rating scheme be introduced that uses specific criteria to allocate scores to vehicles and then decide how much insurance is required.

A New Rulebook

The exciting new rulebook has been designed to regulate any vehicles that were registered after the 1st of August 2024. The system works by taking a look at five key risk areas and then identifying the insurance needs of a vehicle based on scores allocated to each category. These are security, performance, safety, repairability and damageability.

The system has been designed to fix a systemic problem with traditional models of insurance. The old group rating system for car insurance was set at the launch of the vehicle, which in some cases can be years prior. However, the new rating system can increase or decrease overtime which will affect the insurance costs. Essentially, the system becomes dynamic rather than static.

Exciting Changes

Jonathan Hewett is the Chief Executive of Thatcham Research, which is the company that has been pioneering and pushing for the new system to be implemented. He had the following to offer:

“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 insurance, 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 insurance price premiums more accurately but also encourage manufacturers to consider insurance outcomes when designing vehicles.”

It is expected that the new system will provide a greater level of detail and transparency for anybody looking to keep costs down. As a result of the new scheme, a score is awarded which can be between one and 99. As said, the criteria are split into five groups.

Performance examines the characteristics of the vehicle like speed, acceleration and the impact of modern powertrains. Safety focuses on both passive and active safety systems, like crash avoidance features. Repairability focuses on how easy it is to repair damaged vehicles, which will incentivise the creation of vehicles that are easier to repair than some models.

Damageability looks at how the materials and construction in the design of the vehicle can influence the way the vehicle is damaged and how expensive it can be to repair. Finally, security looks at both the digital and physical security measures implemented in the vehicle to protect it from theft and harm.

Once the new system has been introduced, it will run alongside the old system for 18 months to allow an adjustment period for insurance providers and other groups, before the old system is phased out entirely in favour of the new insurance model.