But while the AOA “recognised that there should be greater incentive and reward for good, accident-free driving” and would be able to offer this thanks to advancements in computing, it also penalised cars “of higher than average performance” when sorting them into seven groups.
Furthermore, foreign cars were usually pricier than British ones to insure, despite “tremendous improvement in importers’ organisations and their dealer networks” in many cases.
This was a difficult time for the UK’s insurance industry: as car ownership soared, up to 100 new companies piled into the market, pulling down premiums and profits – and many of them quickly failed.
The trouble came to a head in 1971, when a stock market fall dealt a fatal blow to Vehicle & General, the UK’s second-biggest insurer, leaving 500,000 people unable to drive. They joined the 1.5 million or so who had suffered likewise in the ’60s – none of whom were guaranteed any money back.
The government responded by passing the Insurance Companies Act 1974, giving it greater powers of oversight, and the Policyholders Protection Act 1975, guaranteeing 90% of a person’s promised benefits.
This was actually a light-touch option: Autocar had suspected that the new Labour government might even nationalise car insurance.
Meanwhile, the UK importers for Japan’s Datsun said: “For some time now, we have been convinced that insurance rates for Datsun cars are unrealistically high. [In response] we have concluded an agreement with an underwriting syndicate at Lloyd’s.
“Largely because [this] has, after close examination of the cars and their service and spares back-up, reclassified them into lower groupings than those given by the Motor Conference, appreciable premium savings are possible.”
By 1978, we found that “the whole market now appears to be united in following the recommendations of the AOA for grouping purposes, although there is no compulsion”.
Much of the credit for the new groupings was owed to Thatcham Research, an organisation set up by the UK insurance industry in 1970. It crash-tested cars to understand repair possibilities, methods and timescales and suggest changes to cut costs – and still does to this day.