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Lemonade files S1

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Re: Lemonade files S1

#111

Post by jfno67 »

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.

I think you can say that all insurance have at least partial network effect built in. Quality of underwriting comes from a diverse and large risk portfolio, which leads to profits and pricing accuracy.

Re: Lemonade files S1

#112

Post by supernova87a »

This is also for me, the first time ever hearing about this company.

And reading their mission statement, they say: "Harness technology and social impact to be the world's most loved insurance company."

This is a little bit laughable. Since when ever has a bank, insurance company, or finance-related company been "loved" by its customers? Bringing you joy every day? Maybe they should aspire to a more realistic goal.

Re: Lemonade files S1

#113

Post by hedora »

arkades wrote: post #70
chimeracoder wrote: post #60

Earlier quoted context omitted.

> Which creates a perverse incentive for insurers not to care about payouts Yes, this is a common criticism of the ACA.

It's a bad one. Controlling medical expenses isn't easy. Neither is getting admin + overhead under 10%. You need both to get a reasonably profitable insurance product.

I think this summarizes why single payer health insurance makes so much sense. The insurance companies are taking about 20% of health care dollars and provide no value.

If you assume it costs the health care providers the same amount to file a claim as it takes to process it, then the total overhead of having the insurance industry jumps up to > 30%.

I’ve heard the US numbers are comparable to that, but it is nice to be able to derive it from first principles.

Interestingly, this analysis suggests that the cost of filing a claim should be paid by insurance, not the customer.

Currently the cost is an externality for the insurance company, so they can waste time with nonsensical revisions and rejections before finally paying out.

If the insurance company had to pay for the paperwork on both sides of the process, they’d have a strong incentive to streamline claims.

Re: Lemonade files S1

#114

Post by glofish »

Asked for a quote for my home, got an estimate that is twice more expensive than what I already have with Progressive

so much for machine learning algorithms ... :-)

Re: Lemonade files S1

#115

Post by phonon »

gen220 wrote: post #94
harryh wrote: post #76

Earlier quoted context omitted.

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.

The 72% does not include overhead or sales and marketing, just losses and LAE. I wouldn't call that very good. Their combined ratio is more like 200%

Re: Lemonade files S1

#116

Post by adeelk93 »

0xffff2 wrote: post #96
bcrosby95 wrote: post #77

Earlier quoted context omitted.

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.

"Walls in" is what such a policy would be referred to as

Re: Lemonade files S1

#117

Post by phonon »

1123581321 wrote: post #80
pionar wrote: post #63

Earlier quoted context omitted.

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.

It’s unlikely the estimate varied much from what other insurers would offer you, assuming you were comparing the same building materials and coverage. If Lemonade were so expensive, their loss ratio from the S-1 would be much better and they’d have fewer customers. (Anecdotally, they are offering me about 95% of what I pay Geico for similar coverage, and without the auto insurance discount.)

Renter's insurance doesn't cover the building.

Re: Lemonade files S1

#118

Post by 1123581321 »

phonon wrote: post #117
1123581321 wrote: post #80

Earlier quoted context omitted.

It’s unlikely the estimate varied much from what other insurers would offer you, assuming you were comparing the same building materials and coverage. If Lemonade were so expensive, their loss ratio from the S-1 would be much better and they’d have fewer customers. (Anecdotally, they are offering me about 95% of what I pay Geico for similar coverage, and without the auto insurance discount.)

Renter's insurance doesn't cover the building.

Right, which means I was quoting homeowner’s insurance. Renter’s insurance is priced closer to the possessions replacement portion of homeowner’s.

Re: Lemonade files S1

#119

Post by phonon »

watchyourML wrote: post #109
toomuchtodo wrote: post #49

Earlier quoted context omitted.

What happens when regulators require disclosure of claim handling ML models, as they already regulate insurance rates?

Regulators are starting to lean in on ML rules and requirements. They can't hire data science experts to keep up with competitive demand and salaries, so they are going to require companies to make their ML-based outcomes accessible/auditable. Claims, pricing, risk modeling, underwriting - we're in the early days of companies using ML for these tasks.

They've been doing it a long time... https://consumerfed.org/reports/low-ball-an-insiders-look-at...

Re: Lemonade files S1

#120

Post by phonon »

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?

10% or so to the agent. Everyone makes money on the renewals (your "book").
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