A new report has shone the spotlight on the UK car insurance industry's decision to replace its long-standing vehicle grouping method with a new risk assessment system that scores cars from 1 to 99.
The new model measures performance, damageability, repairability, safety and security. Insurers said the change gives them a clearer picture of how individual vehicles should be priced. It replaced a grouping system that had been in place since 2009 and whose roots can be traced back more than 50 years.
Longstanding debate over sports cars
According to a report from Autocar, arguments over fairness in motor insurance date back to the early years of compulsory cover. In particular, the media outlet noted a complaint in 1938, wherein one of its readers complained that he could not insure his new Speed 20 Alvis, while larger and faster American cars faced no such restriction. Underwriters at the time said sports cars carried higher risks, both because of the cost of repairs and the behaviour of their owners, the report added.
In 1966 the Accident Offices Association, representing 90 insurers, introduced a framework that classified cars into seven groups. Computing allowed insurers to use accident and repair data to a greater extent, although higher-performance and imported vehicles continued to attract higher premiums.
The industry was under strain during this period. More than 100 new insurers entered the market as car ownership grew, forcing premiums down. Several failed, most notably Vehicle & General in 1971, which left half a million drivers without cover. That failure led to new legislation in the 1970s giving the government stronger oversight and providing policyholders with a level of protection.
By the late 1970s, most insurers were following the grouping system, supported by Thatcham Research. Established in 1970, the organisation carried out crash testing and repair analysis to help insurers assess costs and set premiums. Its work continues to inform ratings today.
A more detailed scale
The introduction of the 1–99 system marked the most significant overhaul of vehicle risk assessment since those early grouping frameworks. Insurers believe it will lead to more accurate pricing, particularly for models that did not fit neatly into categories under the old system, the report said.
The change also comes as the market adapts to new challenges, including the repair costs of electric vehicles and the wider use of telematics. Industry observers say the more detailed scale could provide a basis for integrating new forms of data into motor insurance pricing in the future.
