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Understanding the UK car insurance system - Part 1
The process

  • Publication Date:November 2009
  • Publisher:SBD
  • Product Type: Report
  • Pages:27

Understanding the UK car insurance system - Part 1 The process

How to achieve low insurance costs in the UK

The UK insurance approval system is one of the most complicated in the world and has specific performance requirements for damage and repairability in low speed impact, and security performance.

To help appreciate the complexities, SBD presents a three part series of reports on ""Understanding the UK Car Insurance System"" which provide the knowledge needed to gain competitive insurance group ratings in the UK market. The reports provide insight into best practice, explain the insurance processes and recommend how to manage the activities required for a new vehicle to get the best insurance rating it is capable of in the most cost effective manner.

The ""Understanding the UK car insurance system"" series contains three reports:

  • Part 1: The Process - an introduction to the UK insurance system with an explanation of how it works, the effect of recent changes to the system and the main factors that influence a car's insurance rating.
  • Part 2: How to Gain Competitive UK Insurance Ratings - an insight into how to develop an efficient strategy to reduce insurance costs without increasing the vehicle cost.
  • Part 3: Thatcham and their Expanding Global Influence - an explanation of the range of activities that Thatcham conduct for UK insurers and how their influence and methods are attracting interest outside of the UK.

Understanding UK car insurance

The rulebook has changed

In 2007 the UK insurance industry announced that they were planning to expand the number of insurance groups from 20 to 50 to accommodate an increase in model variants and segmentation.

They also changed the group rating formula used to calculate the insurance ratings and allowed manufacturers to have access to the formula for the first time.

It is now possible to set targets, analyse designs and predict the effects of vehicle performance on the final insurance group. This series of reports explains how these processes work, how to maximise performance in the most cost effective manner and how to understand and manage all elements of the complex approvals and rating system with a particular emphasis on vehicle security systems.

Not only is this information vital to minimise the insurance costs of vehicles, as well as reducing their likelihood of theft, the increasing recognition of Thatcham approval globally means that knowing how this system works and getting the best out of it can also be of benefit in other countries.

Part 3: Thatcham and their Expanding Global Influence

The final report in the series explains who Thatcham are and the activities they are responsible for conducting on behalf of the UK insurers. It also indentifies the markets they are already working with outside of the UK and the growing influence they are having within the automotive, insurance and repair industries globally.

Part 3 Includes:

  • An overview of Thatcham's activities in low and high speed crash, whiplash, active safety, insurance group ratings and vehicle security.
  • An explanation of Thatcham's activities in repair technology, repair methods and their training programs.
  • A summary of how they work with other insurance research centres around the world and how they are looking to expand their activity in terms of global security and safety requirements.

Thatcham requirements have already been adopted in Sweden, and the recent Russian assessments have also used Thatcham methods and engineers. Malaysia already recognises Thatcham approval, and Thatcham are in discussion with a number of insurance associations about increased use of the NVSA and the UK group rating system to help reduce theft and encourage manufacturers to lower insurance risks.

Report Description

An introduction to the UK insurance system with an explanation of how it works, the effect of recent changes to the system and the main factors that influence a car's insurance rating. This report sets the background behind the UK system, explains what effects recent changes to the insurance rating system have had and introduces the main factors that influence the final rating of a new model. The report also describes how low speed crash performance and parts pricing are used to set the initial group rating, and how security performance is used to modify the final insurance group.

  • 1. Executive summary
    • 1.1 Introduction to this report
    • 1.2 The “Understanding the UK Car Insurance” series of reports
    • 1.3 Summary
      • 1.3.1. How does the Group Rating Process work?
      • 1.3.2. How has transparency affected the Group Rating Process
      • 1.3.3. Are there going to be any changes in the future that VMs need to consider?
  • 2. Introduction to the “Understanding the UK car insurance system” report series
  • 3. The UK car insurance system
    • 3.1 Car insurance
      • 3.1.1. Car details
      • 3.1.2. Customer details
  • 4. The Group Rating Process
    • 4.1 Steps in the process
    • 4.2 Calculating the initial group rating
      • 4.2.1. Group Rating questionnaire
      • 4.2.2. D&R report
    • 4.3 Calculating the final group rating
    • 4.4 The group rating meeting
    • 4.5 Official Timing
  • 5. Transparency and beyond
    • 5.1 The Impact of manufacturers being granted access to the group rating formula
    • 5.2 Addition of the RCAR bumper test to D&R assessment
    • 5.3 The influence of Thatcham outside of the UK
      • 5.3.1. Within Europe
      • 5.3.2. Globally
  • List of figures
    • Figure 1. Overview of the Group Rating Process
    • Figure 2. The 5 countries with the largest passenger car parcs in Western Europe
    • Figure 3. Top 10 private motor insurers in 2008 and their market share
    • Figure 4. Summary of car insurance policy types
    • Figure 5. Factors used to calculate a customer's annual premium
    • Figure 6. The transition period from the 20 to the 50 group system
    • Figure 7. The steps involved in the Group Rating Process
    • Figure 8. Risk factors contributing to the initial group rating
    • Figure 9. The subject fields in the Group Rating Questionnaire
    • Figure 10. RCAR front low speed crash test
    • Figure 11. RCAR rear low speed crash test
    • Figure 12. Vehicle manufacturers D&R assessment options
    • Figure 13. How the security performance influences the initial group
    • Figure 14. NVSA points requirements
    • Figure 15. Overview of the 3 NVSA categories
    • Figure 16. Thatcham security requirement documents
    • Figure 17. Example of insurance group listings from the Thatcham website
    • Figure 18. The timing of the Group Rating Process according to the ABI Group Rating Panel
    • Figure 19. An example of bumpers that fail to engage
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