The insurer also recorded a £13.6m increase in GWP year-on-year

Sabre Insurance Group’s combined operating ratio (COR) reached 98.9% for the six months leading up to 30 June 2022, according to its half-year financial results released yesterday (14 July 2022).

The motor insurer’s COR for the equivalent period last year was just 74.4%. Geoff Carter, chief executive of Sabre Insurance, attributed this year’s COR increase to “historic highs” in UK inflation.

He explained that inflation had increased the cost of fulfilling open claims and business that was written last year - this factor has also contributed to a net loss ratio of 71.6% for the six months to 30 June 2022.

Market commentators predicted a market-wide COR of 114% for the motor insurance sector in 2022, Carter told Insurance Times.

Sabre’s COR uptick came despite an increase in gross written premium (GWP) for the first six months of 2022 to £91.8m, up from £78.2m in the equivalent period last year.

Sabre noted that its loss ratio for the most recent reporting period should not be extrapolated out to the full-year because Covid-19-related pricing discounts have now encouraged renewals and earnings around motorbike premiums are set to increase in conjunction with seasonally reduced claims.

It said: “We anticipate a loss ratio for the second half of the year in the low 60%s, leading to a full year position of 65% to 75% following this one-off inflation reserve strengthening exercise.”

Extraordinary pressures

Carter added: “We have continued to execute on our strategic objectives this year. The strong recent progress in the business will be impacted in 2022 by the need to reflect the current extraordinary inflationary pressures.

“We believe that taking prudent and assertive action now – in conjunction with our normal pricing discipline – means that we are protecting the underlying profitability of the business and will allow a rapid rebound to our expected levels of performance.”

In March this year, Carter told Insurance Times that Sabre was committed to a policy of covering claims inflation with price increases.

Carter told Insurance Times that this strategy had led to a 19% average increase in pricing over the last year, which he believes is “way ahead of the rest of the market”.

He added: “Having reflected claims inflation fully in our prices, we are increasingly well positioned to take advantage of growth opportunities when market pricing turns.”