I agree but they might just be extra cautious knowing they are highly publicized, I also suspect they are more limited than comparably sized companies.
the initial premiums look extremely LOW for NY. That is probably why so many purchased in the first two days.
Wait for the claims boys. Might not be such a happy P2P story.
Yep, just wait until those pesky little things called “claims” start coming in and the loss ratio starts rising. These boys’s path is very clear – like Esurance build up the platform and sell it to a big carrier for billions.
$14,300 in gross written premium in its first 48 hours, with 25% profit its $3575 : 2 days = $1787, hopefully they will do better in the future, if you had $13,000,000 x 5% = $650,000 : 365 days = $1780 per day.
Would someone please explain the “peer-to-peer?” Sounds like a simple online direct marketer. If I, the consumer, purchase insurance from Lemonade, the carrier, they are not my “peer” unless I’m missing something here… How is the relationship or purchase any difference from any other carrier doing business direct (no agent) online?
The profits will go back to customer’s cause of their choice. What about the underwriting loss. Will the customers have to make up the loss and it may take a few years but their will be a loss.
Well, the industry just posted a $1.5 Billion underwriting loss so it is pretty hard to avoid, especially if you are a start up doing underwriting like they are.
I think it’s the psychic actuaries they hired as opposed to the underwriters.
October 25, 2016 at 4:38 pm
Deplorables says:
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Einstein, will they get off all their business before a storm comes to avoid a loss? The modeling crystal ball will be used for sure.
October 11, 2016 at 4:05 pm
CO_yeti says:
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I’m not an expect on the personal lines side, but to me (as a USAA member) this makes sense. I get a portion of my premiums back almost every year, but I am not on the hook for any shortfalls like a reciprocal. Unlike say State Farm which is a mutual, is in the black, and hasn’t cut a dividend in what 10+ years?
They got an A rating with Demotech with a whopping $5 million in surplus. I didn’t realize a state the size on New York would allow a startup with that little capital.
Best does not rate companies this small. I do have some doubts about Best who used to be the place to go to determine financial stability, premium volume, Loss Ratio etc. They gave AIG a solid A rating prior to the financial meltdown. Hmm!
I just went on their website and did a quote for myself for homeowners in Long Island and their pricing was much higher than what I’m currently paying. And I have a HO-5 policy which should be much more expensive than the stripped down policy that Lemonade offered.
How they distribute their profits does not make a “peer-to-peer” relationship. Does anyone have a clue just what they mean by P2P? They use that description constantly without benefit of explanation. It’s a term they have borrowed from computer networking – where two PCs, for example, can communicate and share files within a network without having to go through a shared central server. If I, as a buyer of insurance, assumed the risk of another buyer directly – and he or another participant assumed mine – that would be a P2P relationship. (And completely illegal if we are both unlicensed carriers) If we both have to assume a connection via Lemonade, well Lemonade becomes the central server and there is no P2P. Unless I’m missing some big, obvious component of Lemonade, they are utterly inaccurate in their utilization of the phrase P2P.
There’s nothing P2P about Lemonade. They have the same corporate structure as Allstate, and the same profit model as Farmers (Zurich).
Lemonade is a stock company that is owned by investors. Although all underwriting profits go to charity, the company gets to keep any profit on the policy servicing fee.
As a new business, being this transparent might be a curse going forward, as they are setting an expectation on sharing information.
I can appreciate their interest to be open and enthusiastic with their initial sales results, but being more prudent might serve them, their investors, and customers better in the long term.
Tell your story in 6 months when you have more than a few sales and a more diverse story to tell.
Sounds like a bunch of a grumbling from a ton of angry old men that are ticked off that someone figured out how much of a complete and utter scam job the insurance industry actually is.
A lot of people do think insurance is a scam especially if they have never had a claim. But the insurance industry exists because claims do happen. These guys have not done anything really new except make their company more socially acceptable by donating underwriting profits… Similar to lots of new companies like Toms shoes and BOMBAS socks, you buy from them and they make a donation. I think as agents most of us have done this for years by giving back in our communities with countless hours of volunteer time, scholarship donations and cash donations to worthy causes. We have done it quietly but maybe need to bring it front and center for all to see. I am not an angry old white man. I am someone who started her business 10 years ago and I employ working moms with flexible schedules. I donate to the soup kitchen, scholarships, needy families and local sports programs every single year. Many of the donations are made anonymously for the satisfaction that comes from doing the right thing not for everyone to see. I think I will be more proactive about this on social media so our clients have the satisfaction of knowing their purchase of insurance from us supports local charities as well as giving them the professional advice they need.
Yes they do, and also a copy of the Inquirer as well. They read about how insurance is a scam then decided to post on a insurance website. Kind of like pouring A1 steak sauce all over themselves, then locking themselves up in a lion’s den.
14, pretty amazing how non insurance people keep getting access to a Insurance site. One of those paid leftist bloggers we keep hearing about? What idiot would come on here and call the insurance industry an utter scam job?
I still think its odd they have 5+ reinsurance contracts for a startup that will probably have relatively small exposures the next few years.
I agree but they might just be extra cautious knowing they are highly publicized, I also suspect they are more limited than comparably sized companies.
Ice Tea?
Jack, how about an Arnold Palmer? Ice tea mixed with lemonade. Don’t think Arnie provided any of the seed money.
nah, Jack…LEMONADE! Read the sign! LEMONADE!!!
gotta admit that’s one funny commercial…
the initial premiums look extremely LOW for NY. That is probably why so many purchased in the first two days.
Wait for the claims boys. Might not be such a happy P2P story.
Perhaps some of those Millennials bought a Renters policy with premiums that low. 70% don’t buy coverage as was pointed out before.
Yep, just wait until those pesky little things called “claims” start coming in and the loss ratio starts rising. These boys’s path is very clear – like Esurance build up the platform and sell it to a big carrier for billions.
$14,300 in gross written premium in its first 48 hours, with 25% profit its $3575 : 2 days = $1787, hopefully they will do better in the future, if you had $13,000,000 x 5% = $650,000 : 365 days = $1780 per day.
Would someone please explain the “peer-to-peer?” Sounds like a simple online direct marketer. If I, the consumer, purchase insurance from Lemonade, the carrier, they are not my “peer” unless I’m missing something here… How is the relationship or purchase any difference from any other carrier doing business direct (no agent) online?
The profits will go back to customer’s cause of their choice. What about the underwriting loss. Will the customers have to make up the loss and it may take a few years but their will be a loss.
Easy answer! They are planning on never having an underwriting loss – ever.
Well, the industry just posted a $1.5 Billion underwriting loss so it is pretty hard to avoid, especially if you are a start up doing underwriting like they are.
Yeah but their underwriters can predict the future so that’s how they will avoid having underwriting losses.
I think it’s the psychic actuaries they hired as opposed to the underwriters.
Einstein, will they get off all their business before a storm comes to avoid a loss? The modeling crystal ball will be used for sure.
I’m not an expect on the personal lines side, but to me (as a USAA member) this makes sense. I get a portion of my premiums back almost every year, but I am not on the hook for any shortfalls like a reciprocal. Unlike say State Farm which is a mutual, is in the black, and hasn’t cut a dividend in what 10+ years?
Over/under on how long this company lasts…3 yrs
Unfortunately, I think it is closer to 18 months. 3 yrs might be their break-even.
What is their AMBest rating?
They got an A rating with Demotech with a whopping $5 million in surplus. I didn’t realize a state the size on New York would allow a startup with that little capital.
Best does not rate companies this small. I do have some doubts about Best who used to be the place to go to determine financial stability, premium volume, Loss Ratio etc. They gave AIG a solid A rating prior to the financial meltdown. Hmm!
I just went on their website and did a quote for myself for homeowners in Long Island and their pricing was much higher than what I’m currently paying. And I have a HO-5 policy which should be much more expensive than the stripped down policy that Lemonade offered.
Lemonade uses the ISO rate manual from 2015.
The major insurance companies do not use the ISO manual anymore. They have their own manuals, and they can offer bigger discounts.
How they distribute their profits does not make a “peer-to-peer” relationship. Does anyone have a clue just what they mean by P2P? They use that description constantly without benefit of explanation. It’s a term they have borrowed from computer networking – where two PCs, for example, can communicate and share files within a network without having to go through a shared central server. If I, as a buyer of insurance, assumed the risk of another buyer directly – and he or another participant assumed mine – that would be a P2P relationship. (And completely illegal if we are both unlicensed carriers) If we both have to assume a connection via Lemonade, well Lemonade becomes the central server and there is no P2P. Unless I’m missing some big, obvious component of Lemonade, they are utterly inaccurate in their utilization of the phrase P2P.
There’s nothing P2P about Lemonade. They have the same corporate structure as Allstate, and the same profit model as Farmers (Zurich).
Lemonade is a stock company that is owned by investors. Although all underwriting profits go to charity, the company gets to keep any profit on the policy servicing fee.
As a new business, being this transparent might be a curse going forward, as they are setting an expectation on sharing information.
I can appreciate their interest to be open and enthusiastic with their initial sales results, but being more prudent might serve them, their investors, and customers better in the long term.
Tell your story in 6 months when you have more than a few sales and a more diverse story to tell.
Sounds like a bunch of a grumbling from a ton of angry old men that are ticked off that someone figured out how much of a complete and utter scam job the insurance industry actually is.
A lot of people do think insurance is a scam especially if they have never had a claim. But the insurance industry exists because claims do happen. These guys have not done anything really new except make their company more socially acceptable by donating underwriting profits… Similar to lots of new companies like Toms shoes and BOMBAS socks, you buy from them and they make a donation. I think as agents most of us have done this for years by giving back in our communities with countless hours of volunteer time, scholarship donations and cash donations to worthy causes. We have done it quietly but maybe need to bring it front and center for all to see. I am not an angry old white man. I am someone who started her business 10 years ago and I employ working moms with flexible schedules. I donate to the soup kitchen, scholarships, needy families and local sports programs every single year. Many of the donations are made anonymously for the satisfaction that comes from doing the right thing not for everyone to see. I think I will be more proactive about this on social media so our clients have the satisfaction of knowing their purchase of insurance from us supports local charities as well as giving them the professional advice they need.
limesprite, there is an old saying that applies to statements like yours:
“It is far better to be thought a fool, than to open one’s mouth, and remove all doubt.”
wow, someone keeps their copy of reader’s digest on hand
Yes they do, and also a copy of the Inquirer as well. They read about how insurance is a scam then decided to post on a insurance website. Kind of like pouring A1 steak sauce all over themselves, then locking themselves up in a lion’s den.
14, pretty amazing how non insurance people keep getting access to a Insurance site. One of those paid leftist bloggers we keep hearing about? What idiot would come on here and call the insurance industry an utter scam job?
When I first read about Lemonade, I thought it was an article from The Onion… Commercial response(?) from GEICO: https://www.youtube.com/watch?v=EnR9ah0v1o4