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Show HN: Lemonade – the world's first P2P insurance company

lemonade.com

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Re: Show HN: Lemonade – the world's first P2P insurance company

#61

Post by gilsadis »

avitzurel wrote: post #54

I read some of the comments about the funnel and I set out to try it myself. There are 8 steps to get a quote 1. First and last name 2. Full address 3. question (renter/owner) 4. roomates/alarm 5. current owner of insurance? 6. Jewelry over 1000$? 7. email, birthday 8. Quote, which seems highly generic and could be done without 6 of the 7 previous steps. I can't even imagine the conversion rate from just checking it…

Valid points all, but if you were getting insurance from the traditional companies, you'd have to answer many more questions, or alternatively, pay for coverage you don't necessarily need. Our funnel tries to get you a personalized quote in minutes, so you pay for what you need. Most of the time this will be considerably lower than traditional carriers.

Re: Show HN: Lemonade – the world's first P2P insurance company

#62

Post by samfisher83 »

h4nkoslo wrote: post #31
samfisher83 wrote: post #24

It looks like these are the companies that are really insuring you: Lloyd’s of London, Berkshire Hathaway’s National Indemnity, XL Catlin etc. Basically they are buying a policy from one of those companies adding 20% and selling it to you. A insurance company works by spreading risk over a large area. By selling everything in NY they are increasing their correlation which raises risk. One of the reasons for the sub p…

There's a difference between insurance and reinsurance. It looks like they're only reinsured through those companies, but the policy itself is underwritten by Lemonade. Reinsurance is basically insurance for the insurance co, for instance if a hurricane hits NYC and wipes out all of their policyholders at once. (It's a bit complicated because there actually are many insurance co's that only sell insurance underwritte…

You are right I guess they could be covering a majority of the claim, but I would guess their reinsurance percentage is probably a high percentage.

For example if the probability of fire is 1%, but due to their limited geographical focus they were covering an entire building of 30 apartment and their coverage is 100 dollars well their rate should be 1 dollar + x%, but if their is a fire their payout will be 3000 dollars due to that correlation of all the apartments burning down. In that case the reinsurance company would have to cover that. If I were Berkshire I would have to price the policy higher for the increase risk.

Re: Show HN: Lemonade – the world's first P2P insurance company

#63

Post by h4nkoslo »

avitzurel wrote: post #59
h4nkoslo wrote: post #47

Earlier quoted context omitted.

Risk models will depend heavily on your specific address, especially in NYC where two properties on the same block might have vastly different risk profiles. Your name is likely used for credit score (effectively conscientiousness score) which is also a huge correlate of risk.

In theory, this is indeed true. However I went through the funnel twice. I googled "The worst neighborhood in new york", went to google maps and picked a random address from this neighborhood. Got the exact same price as another "good" neighborhood in new york.

It's possible the quote is not the actual price - for home insurance, at least, you typically pay the quote & you're covered until they can do an in-person inspection & give a "real" price. You can then either pay / get back the difference, or cancel with a refund for the remainder of the term.

Re: Show HN: Lemonade – the world's first P2P insurance company

#64

Post by rubyfan »

avitzurel wrote: post #54

I read some of the comments about the funnel and I set out to try it myself. There are 8 steps to get a quote 1. First and last name 2. Full address 3. question (renter/owner) 4. roomates/alarm 5. current owner of insurance? 6. Jewelry over 1000$? 7. email, birthday 8. Quote, which seems highly generic and could be done without 6 of the 7 previous steps. I can't even imagine the conversion rate from just checking it…

Insurers are able to offer lower base rates by differentiating customers on many other variables more indicative of risk than a zip code. Property insurance is more than just catastrophe insurance, you're also factoring in your history of claims, personal likelihood of having a claim, replacement and liability costs, etc. It's impossible to segment your quote off of just a zip code.

Re: Show HN: Lemonade – the world's first P2P insurance company

#65

Post by gilsadis »

Hey, Gil from Lemonade here. I see quite a few p2p related comments here and I totally understand how P2P can be confusing as a term. This video can help understand the concept - https://www.youtube.com/watch?v=6U08uhV8c6Y. tl;dr: We use each group's premiums to pay their claims, and unclaimed money goes back to the group's common cause.

Re: Show HN: Lemonade – the world's first P2P insurance company

#66

Post by dave_coen »

gilsadis wrote: post #65

Hey, Gil from Lemonade here. I see quite a few p2p related comments here and I totally understand how P2P can be confusing as a term. This video can help understand the concept - https://www.youtube.com/watch?v=6U08uhV8c6Y . tl;dr: We use each group's premiums to pay their claims, and unclaimed money goes back to the group's common cause.

I think Daniel's comment in the video that the common cause could be a local PTA helps make the point clearer.

Re: Show HN: Lemonade – the world's first P2P insurance company

#67

Post by hueving »

kornish wrote: post #55
walrus01 wrote: post #45

Earlier quoted context omitted.

Probably 20% (edit, now that I think of it, maybe up to 50%) of "hot new startups" I see posted to the front page of HN on a weekly basis are an existing business model with a slick web 2.0 front end, CSS/HTML5, etc, a marketing department run by generation Y and some mobile app developers.

Just because a business is using a proven model, doesn't mean it can't be a "hot new startup". Good for those businesses with sound fundamentals made accessible through new technology.

Slack is a perfect example of this.

Re: Show HN: Lemonade – the world's first P2P insurance company

#68

Post by sharkmerry »

gilsadis wrote: post #56
x2f10 wrote: post #41

Earlier quoted context omitted.

I will answer you as nobody else will. Hacker News users are interested in this idea, but don't want to divulge their actual address to get a "price quote". Ideally, they'd like to give their zip code and get a round-about dollar figure they can use to compare to their current pricing.

Fair enough. The reason we ask for your name first is because we want to create a more personal chat experience. We believe that buying insurance should not only be instant but also delightful.

The comment above yours clearly states HN users don't want to divulge exact address. In fact, they specified their ideal (zip code->quote) but you start justifying why you ask for name when nobody pointed as that being the issue.

Re: Show HN: Lemonade – the world's first P2P insurance company

#69

Post by BillinghamJ »

samfisher83 wrote: post #62
h4nkoslo wrote: post #31

Earlier quoted context omitted.

There's a difference between insurance and reinsurance. It looks like they're only reinsured through those companies, but the policy itself is underwritten by Lemonade. Reinsurance is basically insurance for the insurance co, for instance if a hurricane hits NYC and wipes out all of their policyholders at once. (It's a bit complicated because there actually are many insurance co's that only sell insurance underwritte…

You are right I guess they could be covering a majority of the claim, but I would guess their reinsurance percentage is probably a high percentage. For example if the probability of fire is 1%, but due to their limited geographical focus they were covering an entire building of 30 apartment and their coverage is 100 dollars well their rate should be 1 dollar + x%, but if their is a fire their payout will be 3000 doll…

Reinsurance isn't generally done on a percentage basis. It's generally done on a "the value of any single claim above X amount" basis. "X" is commonly around 1 million dollars.

The insurer pays 0-X, then the reinsurer (and their reinsurers respectively) pay X onwards.

Re: Show HN: Lemonade – the world's first P2P insurance company

#70

Post by gilsadis »

incongruity wrote: post #26
gruez wrote: post #17

>A transparent 20% fee to run everything how does that compare with the profit margins of a traditional insurance company?

Very different market but the the ACA has a Medical Loss Ratio rule that requires insurers to spend 80% of premium dollars on care and thus caps admin costs + profits at 20%. ( http://kff.org/health-reform/fact-sheet/explaining-health-ca... ) I find that an interesting coincidence in this case...

Health insurance is a whole new ballgame. But let's stick to P&C, and especially homeowners and renters, whereas companies are conflicted in paying out claims, as it impacts their bottom line. When they pay you your claim, they make less profits. So they're in this conflicted situation in which they have to decide between profiting, and paying your loss. A flat 20% removes that conflict and aligns interests.
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