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Lemonade files S1

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Re: Lemonade files S1

#31

Post by coldpie »

hammock wrote: post #28
TheSwordsman wrote: post #5

This is honestly the first I'd ever heard of their company; interesting! Only thing that would keep me from jumping is lack of auto insurance as well, but I understand NOT being in to that business. I hope they do well.

You really only would have heard of them of you got served an ad by them. They do a lot of digital marketing. You must not be in their target demo. Not knowing who you are, may I ask why you think that is?

I'm always blown away when I encounter someone who browses the web without an ad blocker. There's a better way, man!

Re: Lemonade files S1

#32

Post by [deleted] »

KingMachiavelli wrote: post #4

In my case Lemonade was by far the cheapest option for renters insurance - even cheaper than bundeling with my auto insurance. Glad to see the company is doing well. I suppose it's greatest risk is incumbents offering more aggressive bundle pricing. So It'd be interesting to see if Lemonade could expand into the auto insurance sphere. Actually from the S1: > in February 2020, we announced our intention to launch pet…

[deleted]

Re: Lemonade files S1

#34

Post by derision »

richardwhiuk wrote: post #7

It's difficult to see why this is a good investment. They've made a net loss for every year in operation - although granted that loss is shrinking. This isn't a tech business - it's an insurance business that uses some tech. There's no network effect, and they are operating in a price sensitive market.

If you're considering organic growth of a component of network effect, they definitely do have that. I used Lemonade and had a great experience, including a claim, and recommended it to a dozen of my friends who signed up as well

Re: Lemonade files S1

#35

Post by forgotmyp77 »

canjoe wrote: post #16
afwaller wrote: post #3

You only make insurance cheaper by charging risky people more. Right now it is mostly laws that protect categories of people that keep insurance companies from charging people more. What’s the plan here, use machine learning in a “hands off” way with a black box algorithm to apply pricing discrimination in a way that a human could not because of regulation?

Insurance can be cheaper if the customers lower their average risk burden. Lemonade tries to explain this, but not clearly: “We seek to encourage good behavior and build a long-term relationship based on mutual trust by endeavoring to decouple our financial incentives from variability in claims. In our model, we minimize any incentive to deny legitimate claims as we aim to give back, rather than pocket, leftover moni…

i think the name for that is hostage?

Re: Lemonade files S1

#37

Post by fouric »

derision wrote: post #34
richardwhiuk wrote: post #7

It's difficult to see why this is a good investment. They've made a net loss for every year in operation - although granted that loss is shrinking. This isn't a tech business - it's an insurance business that uses some tech. There's no network effect, and they are operating in a price sensitive market.

If you're considering organic growth of a component of network effect, they definitely do have that. I used Lemonade and had a great experience, including a claim, and recommended it to a dozen of my friends who signed up as well

I don't think this counts as "network effect" - I believe that that term applies to situations where the value of the service increases with the (square of?) the number of users. Here, you don't get better insurance as people sign up (at least not directly because people are signing up). I think this is just normal word-of-mouth marketing.

Re: Lemonade files S1

#38

Post by ryanianian »

hellomyguys wrote: post #9
afwaller wrote: post #3

You only make insurance cheaper by charging risky people more. Right now it is mostly laws that protect categories of people that keep insurance companies from charging people more. What’s the plan here, use machine learning in a “hands off” way with a black box algorithm to apply pricing discrimination in a way that a human could not because of regulation?

Not disagreeing that is part of the strategy, but also it is worth thinking how much overhead there is in the insurance industry. How many offices are there nationwide? How many of the jobs are essentially basic data ingestion? Approving of claims? How much is spent on advertising? Probably a fair amount of fat to trim.

As a fairly happy user, it's not clear to me how Lemonade solves these problems and ultimately ends up making money by trimming margins.

They still market heavily, and I presume they paid well for their (pretty good) branding.

When I applied there was a wait between applying and having coverage: an amount of time I suspect correlated to a human having to review materials.

My local market has weird insurance regulation, so I had to reach out for customer-service to ensure coverage which wasn't explicitly in the policy. The regulation and compliance department of any insurance company is likely rather large and expensive and rather difficult or risky to offload to AI.

I haven't had to make a claim, but I get the strong opinion that automated claim approvals are basically a function of claim amount and claim history. Anything over $X or for your Nth claim still involves a human at least as a gatekeeper. The AI may be real, but it seems strongly like the usual "fake it till you make it" AI that lots of companies claim to have but are actually 'mechanical turks'.

Re: Lemonade files S1

#39

Post by ddevault »

gen220 wrote: post #20
afwaller wrote: post #3

You only make insurance cheaper by charging risky people more. Right now it is mostly laws that protect categories of people that keep insurance companies from charging people more. What’s the plan here, use machine learning in a “hands off” way with a black box algorithm to apply pricing discrimination in a way that a human could not because of regulation?

At most big old and public insurance companies, claims payable represents a significant chunk of expenses, but not even close to 100% (it's closer to 60-70%). The rest is, generally, "administration" (humans processing papers, and managing humans processing papers, in cushy offices). This is where better technology can result in lower costs. It's a volume/unit-cost game. Their unit cost per person is maybe a few cent…

In addition to increasing efficiency, another way that comes to mind is to lower risk for the population as a whole. For example, investing in safer building codes, local emergency services, mass transit, etc.

Re: Lemonade files S1

#40

Post by MAGZine »

As a company trying to donate their leftover cash to charity, what's the benefit of being public? Won't being beholden to shareholders mean wanting to increase shareholder value vs upholding their commitment to charity?
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