’One of the key things we do around pricing development is constantly churning the data to get the right price,’ says chief executive
Motor insurer Sabre is “now seeing the benefits” of making an early decision to respond to inflation by driving rate onto premium pricing in mid-2022.
That was according to chief executive Geoff Carter, who spoke to Insurance Times following the release of the insurer’s 2023 full year results this week (19 March 2024).
Sabre posted a combined operating ratio of 86.3% for 2023, alongside a record gross written premium figure of £225.1m. This was alongside a net loss ratio of 56.3%, which improved from the previous year’s figure of 66%.
Carter explained that this improved performance was partly “a reflection of just how much inflation has hurt” the motor insurance market, especially coming directly after “a really difficult Covid period”.
He explained: ”If I look at what our claims and actuarial teams did two years ago, they absolutely nailed where [inflation] was going and what we needed to do on price.”
However, Carter also attributed “almost all” of Sabre’s strong financial results for 2023 to this early call on inflation, as it allowed the firm to accurately respond to claims inflation.
Back to the future
In terms of market conditions, Carter said that 2024 should be a case of “back to the future” for Sabre.
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He explained: ”This will hopefully be the first year that we’re back to normal since 2017, where we have a normal operating arena and Sabre is back to how we used to be and want to be going forward.”
In the insurer’s financial results, it anticipated a further significant increase in profitability for 2024 as ”profitable business written in 2023” earns through.
However, the firm has also made strides in developing its data sifting capabilities to further improve its pricing insight and execution.
Carter said: ”One of the key things we do around pricing development is constantly churning the data to get the right price and we have introduced machine learning and aritificial intelligence into that, on top of some really strong data.
”It’s all about trying to charge the right rate for the right risk, so that bifurcation of risk means we are always looking for more and more granular splits in the data, because the more you analyse that, the more confident you can be you’ve got the correct price.”
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