Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Lemonade files S1

sec.gov

Post reply on HN
Print view View original

51–60 of 194 posts

Re: Lemonade files S1

#51

Post by im_down_w_otp »

xfour wrote: post #12

In parallel to this growth of topline and increasing efficiencies, our gross loss ratio declined steadily from 161% in 2017, to 113% in 2018, to 79% in 2019 and to 72% for the three months ended March 31, 2020. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Operating and Financial Metrics." Seems like a struggle to get to profitability. With the ratio of closing the g…

> "the founders probably already did by selling to the VCs"

That is the opposite of how that works, FWIW. Unless the founders took VC money to pay themselves multi-million Dollar salaries or something?

Re: Lemonade files S1

#52

Post by kansface »

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?

> apply pricing discrimination in a way that a human could not because of regulation?

I've read several anecdotes of people hard coding hacks into black box algorithms which end up being discriminatory even when stuff like race is not a direct input. I do not think the law cares how discrimination is arrived at.

Re: Lemonade files S1

#53

Post by annoyingnoob »

> If there's money leftover, we give it back to causes

I grabbed that quote from the web site. With State Farm if there is money left over they give it back. While donating to causes is great, since you want to avoid doing that it just looks like marketing.

We've really bad fires in CA in the last few years. I think claims were in the $12B range from the 2018 fires. What happens to Lemonade when there is a mass causality like this and many insured make claims at the same time?

Re: Lemonade files S1

#54

Post by rcar »

im_down_w_otp wrote: post #51
xfour wrote: post #12

In parallel to this growth of topline and increasing efficiencies, our gross loss ratio declined steadily from 161% in 2017, to 113% in 2018, to 79% in 2019 and to 72% for the three months ended March 31, 2020. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Operating and Financial Metrics." Seems like a struggle to get to profitability. With the ratio of closing the g…

> "the founders probably already did by selling to the VCs" That is the opposite of how that works, FWIW. Unless the founders took VC money to pay themselves multi-million Dollar salaries or something?

Founders often get the opportunity to cash out some of their stake in the company in mid and late VC rounds.

Re: Lemonade files S1

#55

Post by relaunched »

im_down_w_otp wrote: post #51
xfour wrote: post #12

In parallel to this growth of topline and increasing efficiencies, our gross loss ratio declined steadily from 161% in 2017, to 113% in 2018, to 79% in 2019 and to 72% for the three months ended March 31, 2020. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Operating and Financial Metrics." Seems like a struggle to get to profitability. With the ratio of closing the g…

> "the founders probably already did by selling to the VCs" That is the opposite of how that works, FWIW. Unless the founders took VC money to pay themselves multi-million Dollar salaries or something?

It's fairly common, in a strong series C round and beyond for founders to take money off the table, especially when the VC appetite demands it. Typically, founders can sell as much as 10-20% of their vested shares, which can be worth 10s of millions of dollars or more.

Re: Lemonade files S1

#56

Post by aianus »

erichurkman wrote: post #19
hellomyguys wrote: post #9

Earlier quoted context omitted.

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.

Does anyone know what an insurance agent makes? If I go to my local State Farm office to get a home owners policy, what is the cut that goes to the local office/agent?

$800 commission for a $50/mo life insurance policy. You have to pay the commission back if they cancel within a year.

Can’t really offer a source but I heard it from an insurance broker personally.

Re: Lemonade files S1

#57

Post by fuzzer37 »

annoyingnoob wrote: post #53

> If there's money leftover, we give it back to causes I grabbed that quote from the web site. With State Farm if there is money left over they give it back. While donating to causes is great, since you want to avoid doing that it just looks like marketing. We've really bad fires in CA in the last few years. I think claims were in the $12B range from the 2018 fires. What happens to Lemonade when there is a mass causa…

I'm not too knowledgeable about insurance in general, but from the S1 they say "At Lemonade, excess claims are generally offloaded to reinsurers". So, I'd assume if too many people start making claims, they themselves have insurance against that happening.

Re: Lemonade files S1

#58

Post by nostromo »

chimeracoder wrote: post #50
gen220 wrote: post #20

Earlier quoted context omitted.

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…

> 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%). By law, it's required to be at least 80%.

Which creates a perverse incentive for insurers not to care about payouts (If you want to increase profits, you have to increase payouts) -- so long as they can compete on costs with other insurers.

Re: Lemonade files S1

#59

Post by sbilstein »

im_down_w_otp wrote: post #51
xfour wrote: post #12

In parallel to this growth of topline and increasing efficiencies, our gross loss ratio declined steadily from 161% in 2017, to 113% in 2018, to 79% in 2019 and to 72% for the three months ended March 31, 2020. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Operating and Financial Metrics." Seems like a struggle to get to profitability. With the ratio of closing the g…

> "the founders probably already did by selling to the VCs" That is the opposite of how that works, FWIW. Unless the founders took VC money to pay themselves multi-million Dollar salaries or something?

Sometimes VCs will purchase founder equity for cash.

Re: Lemonade files S1

#60

Post by chimeracoder »

nostromo wrote: post #58
chimeracoder wrote: post #50

Earlier quoted context omitted.

> 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%). By law, it's required to be at least 80%.

Which creates a perverse incentive for insurers not to care about payouts (If you want to increase profits, you have to increase payouts) -- so long as they can compete on costs with other insurers.

> Which creates a perverse incentive for insurers not to care about payouts

Yes, this is a common criticism of the ACA.

Post reply on HN