New insurance rating system could increase EV premiums

Vehicle Risk Rating (VRR) system replaces traditional group rating system

New insurance rating system could increase EV premiums
Photo: Bigstock

Motor insurers have introduced a new Vehicle Risk Rating (VRR) system to determine car insurance premiums. This system replaces the previous group rating system (1-50) and considers various factors to assess risk more accurately.

The VRR system, developed by Thatcham Research, uses over 1,300 data points to evaluate vehicles based on performance, damageability, repairability, safety, and security. Each model receives a score from 1 to 99 for each parameter, allowing insurers to better understand vehicle risk.

While VRR offers a more comprehensive assessment, it could lead to higher premiums for electric vehicle (EV) owners. EVs are generally more expensive to repair, and the VRR system’s focus on repairability could negatively impact their insurance costs.

The high cost of EV repairs is partly due to the limited availability of spare parts and the specialised tools required for their maintenance. This issue is exacerbated by the influx of Chinese EVs into the UK market.

However, the VRR system also has the potential to drive positive changes. By highlighting repairability concerns, it could encourage car manufacturers to design vehicles that are easier and more cost-effective to repair. This would benefit all motorists, not just EV owners.

In the short term, VRR may present challenges for EV owners due to higher premiums. However, in the long run, it could incentivise manufacturers to improve vehicle design and reduce repair costs, leading to a more sustainable and affordable automotive landscape.

Source: This Is Money

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