The automotive sector is changing fast. Advanced driver assistance systems (ADAS) such as autonomous emergency breaking, lane keeping systems or intelligent speed assist are commonplace in modern vehicles, but these are just the first step towards a real gamechanger – autonomous driving. Connected and software-defined vehicles are also shifting how we monitor and mitigate risk.
Vehicles are shifting away from the traditional internal combustion engine too. Electric vehicles are gaining traction – with more than 1.6m fully electric cars on the UK’s roads at the end of August 2025.1
New motor manufacturers are also emerging. Dominated for decades by the European, North American and, more recently, Japanese and Korean car brands.
Risk rewrite
Whether a safety refinement, a new powertrain or a shift to automated driving, any of these changes can affect the risk profile of a vehicle. Already, many of the ADAS features are driving significant improvements in road safety. As examples, Thatcham Research found that vehicles with Electronic Stability Control (ESC) are 25% less likely to be involved in a serious or fatal crash in the UK, while Euro NCAP has seen a 38% reduction in rear-end crashes where a vehicle is fitted with low-speed automatic emergency braking (AEB).2
This is hugely positive, but vehicle evolution also brings new risks. Connectivity brings a potential for cyber risks, while the shift to electric brings new challenges to safe and efficient post-collision repair. Further ahead, the move to automated driving introduces a set of liability risks never been seen on our roads before.
Insurance challenge
Exactly how changes in the automotive sector will affect risk is an issue for insurers too. It will be crucial to be agile and put historical claims data into perspective to consider future exposures that are increasingly more sophisticated.
While the additional safety and security features are welcome by all, the increasing complexity of vehicles has undoubtedly lead to more complex repairs, further exacerbated by the cost and availability of parts.
This is particularly pressing as repair costs make up a significant proportion of motor insurance claims. Association of British Insurers (ABI) figures show repair costs increased by £100 million to £2.1bn in Q2 of 2025, making them a major contributor to the £3.1bn paid out in claims that quarter.3
Repair pressure
New technology fuels these rising costs, making it difficult to source parts but also the skills required to repair the latest vehicles. As an example, the Institute of the Motor Industry (IMI) predicts there will be a shortfall of 3,000 electric vehicle technicians by 2031.4
These costs mean that even a minor accident can lead to total loss. Figures from a Freedom of Information request to the DVLA5 show a 46% increase in the number of vehicles written off since 2017, with more than 3m vehicles written off between 2019 and 2024.
Repairability might also differ when looking at vehicles that have been in UK roads for many years in comparison to those from emerging manufacturers. While older cars might be perceived as more difficult to repair due their age, the availability of parts, repair knowledge, tools and methods will play a big part. This means that while newer cars could be safer, they could still present repairability challenges.
Rating intelligence
To resolve this, and more accurately reflect the diversity of the vehicle parc, Thatcham Research has introduced Vehicle Risk Rating (VRR) as a replacement to the longstanding Group Rating insurance assessment model.
Although the Group Rating model has evolved since it was introduced in the 1960s – first from 1 to 9 groups, then 1 to 50 and then adding a security suffix to account for spikes in thefts in the 1980s and 90s – it is stretched to its limits.
The new VRR model uses market performance data, collected in collaboration with vehicle insurers, to account for dynamic factors such as advances in technology, an increased focus on sustainable repair, and emerging theft trends. This offers insurers a much more granular insight into vehicle risk, delivering the confidence they need to underwrite cover.
Five rating pillars
To do this, the VRR model uses five assessments, each scored on a scale of 1 to 99:
- Damage – assesses how design, materials, and construction influence repair costs and damage severity.
- Repair – focuses on the ease and cost of repairs, encouraging repair-friendly vehicle design.
- Safety – analyses active and passive safety systems, including crash avoidance features.
- Security – examines physical and digital security measures, leveraging Thatcham Research’s New Vehicle Security Assessment expertise.
- Performance – evaluates vehicle characteristics such as speed, acceleration, and the impact of modern powertrains.
VRR benefits
As well as offering more granular insight into vehicle risk – the VRR model has 9.5 billion possible combinations – the other key advantage is it’s dynamic. Unlike the Group Ratings, where a vehicle was given a rating for life, the VRR model will be regularly updated so a vehicle’s rating could shift over time.
This means insurers can take any improvements – or deteriorations – in risk into account when underwriting motor insurance. For example, as new repair methods are developed, replacement parts become more readily available or additional technicians gain the necessary skills, a vehicle’s repairability rating may improve.
Having this dynamic approach to vehicle risk rating acts as an incentive to motor manufacturers, with benefits for drivers and insurers. In its one-year update to its 10-point roadmap to tackle motor insurance costs, the ABI states:
“As the system (VRR) develops, we hope it can incentivise carmakers to prioritise designs and technologies that enhance safety, security and cost-effective repairs.”6
Rating rollout
The VRR model was officially launched on September 24th, 2024 and will run alongside Group Rating for 18 months. During this transition period, both models will apply, enabling insurers and manufacturers to adjust before VRR becomes the sole reference for vehicle risk assessment.
As vehicle technology transforms the UK’s roads, the insurance industry is ready. By developing the VRR model, insurers, drivers and manufacturers will have the confidence and clarity to take advantage of all the benefits future innovation will bring.
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This article was adapted from an article by Allianz which can be found here.