Thatcham rating system could bring insurance savings for vans

A new insurance group rating system for vans could see insurance premiums fall for those fleets opting for the safest vehicles. 

The new system, developed by the insurance-funded Thatcham Research, will increase the number of groups from 20 to 30 in January. The new scheme, introduced to keep up with the latest technology, will only apply to vans launched from 2016, although Thatcham hopes that some manufacturers will resubmit existing models for re-test.

Among the van manufacturers Commercial Fleet spoke to, Volkswagen Commercial Vehicles confirmed it will put all models, new and existing, though the new test, while Ford has yet to make a decision about its current commercial vehicle range.

 According to Thatcham, the changes will accommodate advances in the design and performance of modern vans and will reward manufacturers (and therefore fleets) with lower insurance premiums for their products through “good design”.

Thatcham cited AEB, good geometric bumper scores and low repair times as key factors under the new system. 

The organisation began working on the new ratings in summer 2013, after being instructed by the Association of British Insurers (ABI) to produce it.

The decision to change the current system was made after the ABI group rating panel concluded that it was no longer fit for purpose, having been introduced more than 20 years ago and not updated for 10 years. 

Phillip Jagoe, group rating team leader at Thatcham, said: “The current LCV group rating formula is heavily influenced by gross vehicle weight (GVW) and it was found that this caused bunching around certain weights and didn’t differentiate against size, performance and cost. 

“Insurers want to determine risk and they were seeking a far higher level of granularity. So the new process introduces new elements, such as torque, to weight and vehicle dimensions.”

Also driving the change is the RCAR bumper test, which is being incorporated into the LCV group rating process for the first time.

Jagoe explained: “One of the elements of this test is to take the geometric measurements of the front bumper beam, height of beam and distance from the road to the base of the beam, and if they meet certain criteria they are deemed to have passed the geometric test.” 

Another area was recent changes in parts prices and repair calculations.

Jagoe said: “One of the most expensive elements when repairing a vehicle is the cost of damaged parts.” 

Thatcham decided to use a ‘parts basket’ consisting of 19 commonly-damaged and claimed-for parts. If a manufacturer’s parts are more expensive than identical parts from another it will influence the grouping.

New vehicles are also subject to a slow-speed structural impact test, which Thatcham’s engineers use to produce a report detailing the number of hours it would take to repair a vehicle, as well as the costs involved.

According to Jagoe, responses from manufacturers have been positive, although initially the changes did cause confusion. 

He said: “One of the outcomes of the review was to introduce a 1-30 group spread, 1 being the lowest and 30 the highest, as opposed to the current system which is a 1-20 group spread. 

“Clearly, this could cause confusion as vehicles grouped between 1-20 on the new process could be confused with the 1-20 on the current system. Therefore it was decided to show the new groups as 21-50.”

Although the new system requires additional information about a vehicle’s attributes, it will not be mandatory for manufacturer to resubmit evidence for existing vans which will see the two schemes run side-by-side for a number of years.

The ABI does not predict mass re-submitting of existing products by manufactures. Sarah Cordey, senior communications officer at ABI, said: “Existing vans are not due to be widely reassessed and nor is this likely.

“The new ratings system is being set up for use against vehicles registered from January 2016 next year so people who own vehicles which are a couple of years old are unlikely to see any particular change.

“In the future they’ll be able to choose a new van which has been rated against a more detailed ratings system, set up to be as accurate a reflection as possible of each vehicle.”

However, Franco Iannotta, insurance ratings manager at Volkswagen Group UK, said that the vanmaker did intend to put its latest models through the new ratings system.

“While this is not a necessary requirement at present with Thatcham, we have begun this process and the new Transporter and Caddy models have been rated using the new system,” he said.

“We are planning to undertake the same process with Amarok shortly. All of our remaining models will be transferred to the new rating system in due course.”

He added: “On the whole we would expect the cost of insurance policies to remain at a similar price in the short to medium term.

“Variance in this is at the discretion of the individual insurer and of course numerous other factors come into play in addition to the vehicle’s actual group rating.”

Ford said that its commercial vehicles would be “re-assessed” as the company introduced new emissions-related changes, but it did not commit to offering its current vehicles for re-assessment by Thatcham.

A spokesman for Ford said: “This is an industry-wide change that we are working together with Thatcham to support the transition to the new system. We expect our insurance costs to remain competitive.”

Iannotta added: “We believe these changes will be positive for operators and owners of LCVs as insurers will be able to make better informed decisions around policy pricing for these vehicles in future.

“The system is very similar to that used in passenger cars and with a wider range of groups available and new rewards for AEB systems , we expect our vehicles will be placed into more precise groups which accurately identify and reflect their credentials.

“As a result, policies will be more accurate and tailored to each individual model.”

Ben Howarth, policy advisor for motor and liability at ABI, said: “Vehicle technology is advancing all the time, making vehicles safer and easier to repair, and it’s appropriate this is recognised in insurance premiums.

“The work that has gone into developing a new, more detailed ratings system for commercial vehicles is a key way in which insurers are keeping up with developments, and using their influence to encourage manufacturers to aim for ever better design and performance.”