I shopped on Lemonade and found a low grade insurance offer. Why is this on hacker news?
Lemonade files S1
121–130 of 194 posts
Re: Lemonade files S1
#122Earlier quoted context omitted.
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%
Thanks. I was looking for their combined ratio. I suppose it’s not surprising that overhead is high for a fast-growing company. As with many startups, GAAP only reveals part of the story and more fine-grained metrics are needed to gauge potential future profitability.
For those unfamiliar with the combined ratio, taking a stab at an explanation by simplified analogy…
For most normal companies:
Revenue
− Cost of goods
———————————————————
Gross income
− Operating costs
———————————————————
Operating income
− Interest expense
———————————————————
Net income
Premiums
− Losses
———————————————————
“Gross income”
− “Operating costs”
———————————————————
“Operating income”
+ Investment income
———————————————————
Net income
Gross margin = Gross income / Revenue
Operating margin = Operating income / Revenue
Loss ratio = Losses / Premiums
Combined ratio = (Losses + “Operating costs”) / Premiums
Re: Lemonade files S1
#123You 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…
I've been contracting with a mega-big insurance company for a few years. From discussions with fellow contractors in siimlar-sized insurance companie, we all tend to reach the same conclusion..
Ιmagine a spaghetti code. Now think of an IT eco-system that has grown with half-baked interfaces, patches, MANY MANY MANY MANY spreadsheets, legacy systems (and I mean having MS Server versions 10+ years old), and nobody dares to change passwords because there will be pain.
Now imagine that a mega-big insurance is growing by M&A, and it becomes mega-big by absorbing other companies, (speghetti-zed) IT eco-systems, and they try to absorb processes and data with even more spaghetti-ish manners. One sneeze and the world is coming down...
Now consider a new, modern company that has the talent, and none of the inheret problems/risks. They may not be mega-big (yet), but they got the potential to slowly steal chunks of the market, only if/the grow clean, fresh, and organically.
In the UK it's a (growing?) trend to have your app on someone's phone, tracking motion from the phone's sensors (accelerometer, GPS/speed, etc.) and they can give you lower premiums. The possibilities are endless... as long as they are modern enough.
Re: Lemonade files S1
#124What protects them? It’s unclear to me what’s their “unfair advantage”. I can tell you what it’s not — a chat bot. Unless they have some NLP/AGI breakthru (and if so, why are they an insurance company?), the apps that Allstate, Geico, etc are pushing should be able to do the same thing. Even if not in a “chat” interface, the end result will be the same. So do they simply have a nicer UX / more appealing model (market…
Recently had to shop for renter insurance. Lemonade chat bot was the best one. It was the only place I could get insurance without talking a human being. AllState took 4 calls and multiple callbacks just to send me a final quote. While waiting for last callback I just went ahead and got Lemonade.
Most insurance carriers I called want to "We can't find your quote, can you please repeat all those pages again, so we can start a new one?" Most don't disclose what features they offer and let you customize it _fast_. Fucking AllState didn't even show much property cost is insured until I called them and it didn't let me add more coverage until I called. 9.99 a months is very cool, but I would like to know how much and what insured first.
Customer support is pretty good as well at Lemonade. One email and my old policy canceled and all personal items transferred to new place.
That is on top of the fact that no one goes above 300k and make you buy a 1m umbrella policy. All while trying to sell you car insurance, life insurance, shit yo pants insurance.
Re: Lemonade files S1
#125Not available in FL... Scared of hurricanes?
Re: Lemonade files S1
#126I use lemonade for my renters insurance, since it’s cheaper than the alternatives. I have to say their UX is a classic example of form over function.
- To buy and manage a policy, you have to install their mobile app. They have a website, but to do anything substantial they redirect you to the app.
- I canceled the credit card I use for the premium. To update the credit card, I have to use the virtual chat bot, which comes with fake “typing…” indicator.
I bet these fancy UX cost them a lot of money, but literally made the experience worse.
Re: Lemonade files S1
#127This 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.
Point taken, but a lot of people seem to really like their credit union (which is a bank).
Re: Lemonade files S1
#128I use lemonade for my renters insurance, since it’s cheaper than the alternatives. I have to say their UX is a classic example of form over function. - To buy and manage a policy, you have to install their mobile app. They have a website, but to do anything substantial they redirect you to the app. - I canceled the credit card I use for the premium. To update the credit card, I have to use the virtual chat bot, which…
I was able to quote and finish two homeowner's policies without downloading and installing the application. It was a great experience. The only issue was modifying the policy prior to it being accepted by mortgage servicer (part of escrow).
Re: Lemonade files S1
#129What protects them? It’s unclear to me what’s their “unfair advantage”. I can tell you what it’s not — a chat bot. Unless they have some NLP/AGI breakthru (and if so, why are they an insurance company?), the apps that Allstate, Geico, etc are pushing should be able to do the same thing. Even if not in a “chat” interface, the end result will be the same. So do they simply have a nicer UX / more appealing model (market…
They don't need their automated chat bot to handle everything to have a competitive advantage. I once made a claim through Lemonade. My case was simple: my bike was stolen, and I had a police report, a picture of bike, and also the original purchase receipt. My claim was entirely automated.
The point is not to build a chat bot that handles everything, but a chat bot that handles a larger fraction of claims than competitors. And that drives down costs.
Re: Lemonade files S1
#130I use lemonade for my renters insurance, since it’s cheaper than the alternatives. I have to say their UX is a classic example of form over function. - To buy and manage a policy, you have to install their mobile app. They have a website, but to do anything substantial they redirect you to the app. - I canceled the credit card I use for the premium. To update the credit card, I have to use the virtual chat bot, which…
Those kind of patterns sound like they are business-motivated and not form over function. Look at sites like Facebook or Reddit that are perfectly suited to mobile web but aggressively push users to apps. Apps make for a walled-in experience and more engagement. And they let companies push more and more features you didn't ask for.