How Lemonade Is Deciding Who Else May Sell Its Insurance

By | November 20, 2017

  • November 20, 2017 at 1:19 pm
    J. Quitsa says:
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    When is direct insurance no longer direct? Wouldn’t the real estate and other firms need to be licensed to solicit insurance?

  • November 20, 2017 at 2:26 pm
    Underwriter says:
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    Nice, unlicensed people selling insurance! Talk about being disruptors… for the DOI.

    • November 21, 2017 at 9:46 am
      UW says:
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      Except that’s not happening. Lemonade is selling it.

      • November 21, 2017 at 1:25 pm
        Einstein says:
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        And exactly how is that not selling insurance? Say for example when I am purchasing a home and my mortgage broker goes online somewhere and prints out an HO3 quote for me, I then ask my mortgage broker “… are these all the coverages I need?…” and my mortgage broker says yes or no, you need this, this and that. Is that not selling/giving advice on insurance? And is Lemonade paying a referral fee to each referral?

        A lot of gray areas. Reminds me a bit of Zenefits.

  • November 20, 2017 at 2:30 pm
    APD says:
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    Maybe they should start selling via lemonade stands.

    • November 27, 2017 at 12:09 pm
      Agent says:
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      Allstate used to sell from Kiosks in the Sears store.

  • November 20, 2017 at 10:32 pm
    jw says:
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    They are “referrers” not sales agents. We had real estate and insurance and referral fees to the real Estate agents for lead or referral.

    • November 21, 2017 at 9:48 am
      UW says:
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      Yeah it’s odd how a stupid name is making people go so crazy about this company. One particular person posts in every story about them and obviously has no clue what they do.

      • November 22, 2017 at 12:28 pm
        Augustine says:
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        I actually went ahead and got a quote with Lemonade to take their system for a quick run. Right now in Texas they are only doing renter’s insurance. I cannot honestly see why a tech firm would want to jump into insurance by getting into the toughest market there is. The Direct Sales market is basically controlled by Progressive and Geico because it is so difficult to remain profitable on. I think if a tech company wants to try their hand at insurance, they should probably start in a different space. Just my two cents.

        • November 29, 2017 at 1:05 am
          UW says:
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          They aren’t really a tech firm, they are an insurance company selling digitally. I agree on the market to a point, but it’s also one where it’s easier to use aggregate data to estimate risk than say trying to estimate the GL risk of thousands of different companies. I have my doubts about the long-term success of this company, but I think it’s very likely tech companies or companies that emphasize tech will seriously change the insurance company, and devastate a lot of traditional insurance companies and brokers pretty soon. The industry is just way too stuck in the past, on everything from the people in the industry, to the working conditions, to the hiring practices, to how they actually run their businesses and make sales. Look at basically all the (A)gents on this board, and most of the underwriters; they are way behind the times, and many, if not most, not only don’t know science and math, they have actual disdain for it, and doubt literally everything they don’t like. You cannot measure or property advise on risk with that skill and mindset.

    • November 21, 2017 at 9:16 pm
      okt0ber says:
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      Real estate agents, at least in Texas, are prohibited from accepting “referral fees”. So what exactly do they need the software for if they are just referring, for free, customers to Limonade? It doesn’t make sense to me.

      • November 27, 2017 at 12:10 pm
        Prentice Walker says:
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        They can find some way of charging another type of fee. No different than Lyft or Uber saying they are not a taxi company

      • November 27, 2017 at 7:47 pm
        ChangeReady says:
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        The wise rel estate agent realises it is not about earning a fee, but creating a more connected customer.

  • November 21, 2017 at 8:14 am
    Mike F says:
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    This does not seem like it would create any problems with unlicensed selling as this is basically just a built in app allowing Lemonades broker to sell insurance on other peoples websites. That being said, this does not provide property managers or related businesses with a competitve advantage since the coverge is offered to the general public at lemonade.com.

  • November 24, 2017 at 2:17 pm
    DLaG says:
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    Disclosure: I have been both a life and health as well as a property and casualty broker for over 30 years.

    Their website (lemonade.com) suggests that a person “switch” to Lemonade from a variety of carriers but the website does not suggest which carrier is on the risk. Carrier stability matters significantly, however, there is no mention of which entity holds the risk for Lemonade. Somebody needs to dive into this question.

    If anybody is getting paid for a referral anywhere in the sale cycle, then that person/company/brokerage, etc needs to be licensed to legally receive compensation. This is true in both insurance and real estate law.

    If anybody is offering advice as to which features of the policy to buy/not buy, then that person needs to be licensed as “the expert”. The concept of licensing is not new here but being licensed conveys to a person at least a minimum of the required knowledge to offer advice about insurance.

    In an earlier post, Einstein mentions Zenefits and how they attempted to disrupt the employee benefit business. Not too long ago, Zenefits admitted that many of their representatives were not licensed and paid huge fines in the millions for this “oversight”. Fines are still coming their way as of this post (Nov. 24, 2017). No doubt that Lemonade is very aware of the Zenefits debacle. Let’s see if history repeats itself in such a short time if Lemonade is viewed by the State Insurance Commissions in any manner similarly to how Zenefits was treated.

    • November 27, 2017 at 8:27 pm
      jw says:
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      We paid our real estate salespeople a referral fee (not dependent on a sale or appointment) and insurance department was ok with it

  • November 27, 2017 at 10:54 am
    Agency says:
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    Lemonade has very small chance of survival, their founder are running on principals that only drive high loss ratios for the worst time of business (renters) which has a very high attrition rate. Yes they are also doing home insurance, but well over 97% of those owning homes want a professional to handle it because there is too much at stake and they have more sophisticated insurance needs. This will leave Lemonade with the worst business with poor retention.

  • November 27, 2017 at 8:24 pm
    jw says:
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    Our agency had real estate division and we ended up selling to a bank. I can tell you that the individual agents, loan officers, and tellers had no interest in promoting other divisions, they don’t want to share control of client. But the promotion by other than staff is golden opportunity.

  • November 27, 2017 at 8:47 pm
    EJ says:
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    On several points…(sorry, a bit long but this is an important issue)

    There is a big difference when “selling” insurance and “buying” insurance. One need’s a license to “sell” insurance but not when the consumer “buys” a policy direct without an agent (i.e. GEICO online). That’s why a licensed broker needs E&O (The agent told me I was covered or I told the agent but the agent did not, bla, bla, bla). Lemonade has no E&O exposures.

    The consumer’s are requested to read the policy and all policies of the same type are the written the same within each state. Lemonade offers the same coverage’s as any other carrier, it’s just offering, not selling. The consumer decides to buy or not. No selling going on.

    Zenefits was “selling” policies and therefore needed to be licensed.

    Real Estate agents are not selling the policies, they are just pointing the consumer to the Lemonade website so they are not required to be licensed. The website takes care of all the legal requirements.

    I went to Lemonade site and everything I read is spot on. They have the same coverage’s, exposure and losses as any other carrier, only they are open 24/7 with self-service like GEICO (which I personally have had now for many years) I do everything myself. If I have any questions, it’s online. All I need to do is read.

    GEICO and Lemonade offers the consumer all their options to choose. Consumers do want the options to decide for themselves when given the opportunity which Lemonade is now doing. (millennials want everything online to purchase and insurance is no exception)

    The same is now happening with small commercial (i.e.BOP’s). Next up will be Work Comp., if not already and last up, big commercial!

    Look out, it’s happening…

    BTW: When I started my career in insurance back in 1976, GEICO was just another carrier further down the list on premium size. They are now #2 nationwide behind State Farm since they went online with some lizard.

    BTW2: When I started my career at Allstate in 1976, I would hang door hangers on apartments for renters insurance two to three times a week. When I sold all those renter policies, many turned into homeowners when they bought a house. Many times I would then write their auto, life, health and sometimes business too. 4 years later, I was the #1 agent in my region of 500 agents with a combined loss ratio of 38%. Renters are the best source to start (IMHO) because they are all but ignored. I think that is why Lemonade is taking this same route.



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