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How Car Insurance Groups Are Assessed

Thu, 12/06/2014
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One of the most important rating factors in motor insurance is the car itself. There are thousands of different vehicle variations on the road and having so many vehicles to rate would be extremely complex.

In order to simplify things the ‘ABI Group Rating Panel’ created a system of group ratings for vehicles which puts all of these cars into one of 50 groups[1] according to the risk that they present to the insurance companies. This group system had previously been simpler – there were only 20 groups before this and have been as few as 7 groups in the distant past. 

The ABI panel is made up of the ABI (Association of British Insurers) and the LMA (Lloyd’s Market Association) and the administration of the ratings is performed by Thatcham Research Centre.1

The group system was revised again in January 2013 after the Panel and Thatcham consulted the insurance industry at large and car manufacturers.1 This consultation lead to some amendments to the calculations used to place vehicles into groups and would explain the changes to premiums that were experienced around this time.

Long gone are the days when insurance companies only looked at a car’s engine size (cc); the rating factors of given vehicles are now considerably more in depth. Factors that are now examined include:[2]

  • Damage and Parts Costs The likely extent of damage to each car model and the cost of the parts involved in its repair. The lower these costs, the more likelihood there is of a lower group rating.
  • Repair Times Longer repair times mean higher costs and the greater likelihood of a higher group rating. Different paint finishes on modern cars are an important factor, so these too are taken into account.
  • New Car Values The prices of new cars are taken into account as they are often a good guide to the cost of replacement and repair.
  • Parts Prices A standard list of 23 common parts is used to compare one manufacturer’s parts costs to another. The lower these costs, the more likelihood there is of a lower group rating.
  • Performance Acceleration and top speed are important factors. Insurers know very well, from their claims statistics, that high performance cars often result in more frequent insurance claims.
  • Safety Cars that are fitted with an Autonomous Emergency Breaking (AEB) system are less likely to be involved in low speed front to rear accidents, therefore where AEB is fitted as standard this will be taken into account and will reduce the insurance rating.
  • Bumper Compatibility The alignment and structure of front and rear bumpers is an important factor in how cars perform in a front to rear accident. Those cars with bumpers that meet the insurer’s criteria and are therefore compatible receive lower insurance ratings.
  • Car Security: features fitted as standard equipment by motor manufacturers can help to reduce insurance claims costs. Such features include high security door locks, alarm/immobilisation systems, glass etching, coded audio equipment, locking devices for alloy wheels and visible VIN numbers.

These ratings published by the ABI group rating panel are used as a GUIDELINE for insurance companies ONLY and insurance companies are free to move vehicles between groups based on their own claims experience.

Looking for Lower Premiums?

The only way to secure a lower premium is to lower the risk you present to the insurance company. This article has looked at car groups and, in short, the lower the car group the  lower the risk.

Group 1 is the lowest risk and below are some vehicles that currently fit into the ABI group 1:[3]                                                                                                                                                 

  • Chevrolet Spark
  • Citroen C1 (various particular models)
  • Fiat Panda
  • Skoda Fabia Classic
  • Vauxhall Corsa Expressions
  • Volkswagen Fox

These are considered the lowest risk vehicles by the ABI group rating panel and whilst insurance companies may rate them slightly differently, these vehicles will definitely feature in the lower groups and as such should have the lowest insurance premium costs.

 


[1] http://www.thatcham.org/what-we-do/group-rating

[2] http://www.thatcham.org/files/pdf/Group_Rating_Explained.pdf

[3] http://www.carinsurancegroups.co.uk/insurance-groups/group-1/

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