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

91–100 of 194 posts

Re: Lemonade files S1

#91

Post by gen220 »

deeg wrote: post #41
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?

I'm tangentially involved in the insurance space and I believe Lemonade is trying to use machine learning to process claims because: - Processing claims with humans is expensive; every step that can be accomplished by a computer will probably be cheaper. - A claim processed via ML will probably be handled fast. A fast response = happy customer, which helps with retention. This is a big one. - A claim that is processe…

Depending on your perspective of "ML", the insurance industry already uses "ML" (i.e. very complicated decision trees) to process claims. Very few large insurance companies are non-automated in claims processing.

The places where the money hides, so to speak, include (1) handling complex cases [customers] (2) scaling a human's ability to process non-automatable settlements. (3) scaling internal support interactions with customers (4) introspection to claims data and support data. (5) graceful handling of prior authorizations.

These problems are not as attractive, but they are where insurance companies spend most of their money. It's still a tech problem, but it's not super fancy.

Existing carriers struggle to solve these problems, because they have historically grown by acquisition, and as such do not have the kinds of unified data systems required for the rapid development of applications that perform the required kinds of introspection. It's a space that's ripe for disrupting.

Re: Lemonade files S1

#92

Post by carstenhag »

Have gotten ads for Lemonade in Germany. Their ads are very misleading:

- The ad is for a Haftpflichtversicherung. It pays, when you for example use the phone of a friend and it falls down. You are obligued to pay for the damage.

- In the ad, they make it seem like your own device is insured, which is not the case.

It does not seem to me that they are to be trusted.

Re: Lemonade files S1

#93

Post by 0xffff2 »

pionar wrote: post #63
deeg wrote: post #41

Earlier quoted context omitted.

I'm tangentially involved in the insurance space and I believe Lemonade is trying to use machine learning to process claims because: - Processing claims with humans is expensive; every step that can be accomplished by a computer will probably be cheaper. - A claim processed via ML will probably be handled fast. A fast response = happy customer, which helps with retention. This is a big one. - A claim that is processe…

I'm not sure what's in it for me as a consumer. I did a quote with them a couple weeks ago, and even with all the "discounts", it came in at almost double the premium with worse coverage.

I just checked, and for my apartment they come in at about half of my current renter's insurance for similar coverage. Maybe it's highly dependent on location, or maybe I'm just way overpaying for renter's insurance. Unfortunately for them, switching away from the bank that already handles 95% of my finances isn't worth saving $100/year.

Re: Lemonade files S1

#94

Post by gen220 »

harryh wrote: post #76
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…

It sounds like you don't know what "loss ratio" means in the context of an insurance company. Loss ratio is the % of premiums collected that are paid back out in claims. If the number is below 100%, then your core insurance business is profitable Of course, this doesn't mean your company is. Insurance companies have many expenses beyond paid claims. But loss ratio should never get to 0% and, by definition, can't be n…

Here to echo. I work in insurance and 72% is actually very good when you consider (1) their trajectory of how long it took them to get there (2) how strongly they're investing in growth, which is very expensive.

Re: Lemonade files S1

#95

Post by 0xffff2 »

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?

Not GP, but I'd never heard of them either. About the only place I ever see ads anymore is the embedded overlay ads on hockey games (back when sports were a thing). I've managed to block pretty much every other form of ad online, so it doesn't much matter what their target demo is.

Re: Lemonade files S1

#96

Post by 0xffff2 »

bcrosby95 wrote: post #77
joshgachnang wrote: post #46

Earlier quoted context omitted.

They were cheaper for me until I realized they don't cover earthquakes, and then they became much more expensive than bundling with USAA sadly. I'd definitely be interested in them for most types of insurances though. They're super easy to use and importantly, super easy to cancel.

I don't know how it is for renters, but you can't find a standard homeowners insurance that will cover earthquakes, at least not in California. This occurred after the damages and insurance claims from the Northridge earthquake. You have to buy earthquake insurance through a state program that the insurance company may offer - but it isn't really from the company, its from the state. In general, they are extremely hi…

I don't know about other insurers, but USAA's renter's insurance covers earthquakes. Also, I just got a quote from Lemonade and they have an option to add earthquake coverage via a third party.

I think the difference is that renter's insurance isn't covering damage to the building. They're only covering damage to your stuff if it gets buried underneath the building.

Re: Lemonade files S1

#97

Post by rohan404 »

gabeh wrote: post #83
relaunched wrote: post #55

Earlier quoted context omitted.

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.

I can confirm this goes beyond the founding team, I've sold shares as a part of raising capital at the last two places I've been employed. I was an early hire at both and held the CTO title. Series C in 2014 and most recently series B at the start of 2018. I also seek out opportunities to unload my equity in the secondary market, but I'm usually taking a haircut there vs the premium investors that are looking for a b…

Out of curiosity, how did you find investors to sell to for secondaries?

Re: Lemonade files S1

#98

Post by JackFr »

londons_explore wrote: post #79
hardikgupta wrote: post #61

Earlier quoted context omitted.

Loss ratio is a specific measure in the insurance industry. You don't need to get to 0% loss ratio for the company to be profitable and ~70% loss ratio isn't bad for a relatively new company. Typical P&C insurance companies have loss ratios ~ 50%.

Whoa - if typical loss ratios are around 50%, surely there is a big opportunity for someone else to swoop in with cheaper insurance products?

Losses + “Loss adjustment expense” are your costs. Loss adjustment expense is broken into Allocated Loss Adjustment expense - expenses tied to a particular claim (Typically lawyers); Unallocated Loss Adjustment Expense - overhead.

Theoretically two companies with the same policies will pay out the same losses but will differentiate themselves in expense ratios.

In some lines it’s not bad to have loss + expense ratios > 100% because the average time of premium is very far from the average date of loss, so while there is an underwriting loss it is offset by the investment gain.

Re: Lemonade files S1

#99

Post by gen220 »

ddevault wrote: post #39
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…

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.

Yep! One way that insurance compmanies can achieve this is by providing members of their insured population access to services that reduce their individualized risk.

Pre-COVID, many health insurance companies (my industry) were gearing up to offer free Doctor on Call (a service that, if well-implemented from a tech PoV, has near-zero margin costs), because access to such a program reduces the risk of expensive claims later down the line.

I'm sure there are equivalents in the kind of insurance that Lemonade provides. For example, they might offer free or heavily subsidized home security installation in certain zip codes with a history of burglaries.

Re: Lemonade files S1

#100

Post by deeg »

petra wrote: post #75
deeg wrote: post #41

Earlier quoted context omitted.

I'm tangentially involved in the insurance space and I believe Lemonade is trying to use machine learning to process claims because: - Processing claims with humans is expensive; every step that can be accomplished by a computer will probably be cheaper. - A claim processed via ML will probably be handled fast. A fast response = happy customer, which helps with retention. This is a big one. - A claim that is processe…

So from your insider vantage point, how will the insurance job market look in 5-10 years ? What jobs, if any, would be left ?

I don't work directly for insurance companies so I am not a good judge of what jobs will be around. I would expect that any job that deals manually with claims--line entry, price evaluation, even fraud detection--will decline, maybe a lot. However, I don't see them going away entirely--there are just too many anomalies and the data you're dealing with is too dirty. That's not sticking my neck out too much; you can say pretty much the same thing for any broad industry. :)

I assume that Lemonade is banking on doing away with almost all manual processing so they're ideas are different from mine.

Post reply on HN