You don’t raise/invest $300M to stay in the homeowners and renters market…The naysayers can whine all they want but the writing has been on the wall for many years that carriers’ products/platform and the agent/broker relationship needs to evolve. Buzzwords aside, the smartest move Lemonade made was building from the ground up. The industry is too far outdated to try and retrofit to close the technology gap.
CO_Yeti, just out of curiosity…. Do you work carrier side, broker side, agency side? CL side or PL side? I ask because I find it quite fascinating that so many people think that insurance companies are somehow technologically inferior to other companies… Certainly compared to the tech sector, insurance is not as innovative, but if you compare insurance to other service sectors the utilization of technology is definitely there. Insurance was one of the first sectors to try and utilize blockchain technology, AI modelling, AI claims etc. In fact, most companies are moving towards automating large parts of their underwriter processes… Do you work in the tech sector or the insurance sector? I have been agency side, carrier side, PL side and CL side and I can tell you that making broad statements about a lack of innovation in insurance are often unwarranted. Typically, the old “dinosaurs” of insurance are being forced to innovate or die… Our entire industry is driven by combined ratios which often reflect which companies are embracing innovation and which are not.
At the end of the day insurance is calculating and modeling risk and offsetting expenses with investments and proper underwriting criteria. You can dress this up anyway you want and you can utilize technology to improve the processes, but at the end of the day combined ratio is king. I am not sure if you have ever had a chance to dig into any risk analytics from a company like verrisk or LexisNexis, but the data that is already available to insurance carriers is staggering. If insurtech companies can mine data that is useful to the underwriter or risk modelling then that is great, but unless they can drastically improve data mining, overhead cost and risk modelling then it is all one giant moot point. People fail to realize how complex the insurance actuarial models really are and also don’t really grasp how the data is being used… Just my two cents. These insurtech companies have great and innovative ideas but they are drastically underestimating the abilities of “old fashioned insurance.”
The executives and software developers will make out like nicely, the investors have probably flushed their investment down the toilet. I don’t say that lightly, I bet Allstate regrets buying Esurance and further bet it’s worth a fraction of what they paid for it. They invested the 300m because they want to believe cheep insurance is the only way to sell insurance while it’s just about the worst way to sell insurance and doesn’t work over the long run. But this is different? Yes, that is the same story we have been hearing for the last 20 years. This including recent years where Google thought they can pull it off, now Google is investing in agency technology.
“Lemonade said it collects “100 times more data than traditional carriers,” enabling the company to generate highly predictive data and improve its underwriting and pricing.”
And yet in their “Super Transparency Chronicle” published Sept 20, 2018, they claim “data paucity” is a cause for their 130% loss ratio. It appears the business model was to come in with cheap premiums with the hope that they would gain market share and an edge with low expenses and someday earn out the upfront costs and pay back investors. To me, raising another $300M at this stage isn’t a sign of robust growth.
Lemonade said it collects “100 times more data than traditional carriers”. Oh really? And whence does this data come? Facebook? Twitter? Been Verified?. I’m sorry , but there’s not 100 times the data out there to be had. There just isn’t.
That aside, I feel like an dinosaur. These guys might just topple us. At first I thought they were a joke but now they worry me. Every business these days seems to be subjected to these “disrupters”. It scares an old man like me.
You raise $300M to go to Europe and elsewhere to sell insurance, because you haven’t shown yet you can do it profitably on your home turf. How long did it take Amazon to be a PROFITABLE company, not just a buzzword? Cashflow may work for selling books or booking rides, but in insurance you eventually have to have an underwriting profit or the regulators and rating agencies will see to your demise.
Automobile insurance is adversarial and litigious. AI will get you somewhere, but it won’t get you through trial. I suspect the low fruit has been harvested, and so far from a financial perspective its been lemons, not lemonade.
Do I worry about disruption in the insurance industry?Yes, absolutely. I recall disrupting the old timers before me with faxes and computer estimating tools, cell phones, remote printers, and applications installed on clunky laptops. And yet, the industry survived. As people head on-line, I think they’ll head back to agents or direct writers with live people who help them with their assets once they have them.
Of course, that’s just my opinion. I could be wrong…
I know Allianz — they’re a good, strong company. They would not invest in something where they could get a bigger benefit in a concrete, practical way. They are clear-eyed and pragmatic. My guess is most of the $300 M is for capital/surplus for support a SE carrier. This gives AZ a front row seat to European insurtech disruption — and the right to be first in line when Lemonade fails.
You don’t raise/invest $300M to stay in the homeowners and renters market…The naysayers can whine all they want but the writing has been on the wall for many years that carriers’ products/platform and the agent/broker relationship needs to evolve. Buzzwords aside, the smartest move Lemonade made was building from the ground up. The industry is too far outdated to try and retrofit to close the technology gap.
CO_Yeti, just out of curiosity…. Do you work carrier side, broker side, agency side? CL side or PL side? I ask because I find it quite fascinating that so many people think that insurance companies are somehow technologically inferior to other companies… Certainly compared to the tech sector, insurance is not as innovative, but if you compare insurance to other service sectors the utilization of technology is definitely there. Insurance was one of the first sectors to try and utilize blockchain technology, AI modelling, AI claims etc. In fact, most companies are moving towards automating large parts of their underwriter processes… Do you work in the tech sector or the insurance sector? I have been agency side, carrier side, PL side and CL side and I can tell you that making broad statements about a lack of innovation in insurance are often unwarranted. Typically, the old “dinosaurs” of insurance are being forced to innovate or die… Our entire industry is driven by combined ratios which often reflect which companies are embracing innovation and which are not.
At the end of the day insurance is calculating and modeling risk and offsetting expenses with investments and proper underwriting criteria. You can dress this up anyway you want and you can utilize technology to improve the processes, but at the end of the day combined ratio is king. I am not sure if you have ever had a chance to dig into any risk analytics from a company like verrisk or LexisNexis, but the data that is already available to insurance carriers is staggering. If insurtech companies can mine data that is useful to the underwriter or risk modelling then that is great, but unless they can drastically improve data mining, overhead cost and risk modelling then it is all one giant moot point. People fail to realize how complex the insurance actuarial models really are and also don’t really grasp how the data is being used… Just my two cents. These insurtech companies have great and innovative ideas but they are drastically underestimating the abilities of “old fashioned insurance.”
The executives and software developers will make out like nicely, the investors have probably flushed their investment down the toilet. I don’t say that lightly, I bet Allstate regrets buying Esurance and further bet it’s worth a fraction of what they paid for it. They invested the 300m because they want to believe cheep insurance is the only way to sell insurance while it’s just about the worst way to sell insurance and doesn’t work over the long run. But this is different? Yes, that is the same story we have been hearing for the last 20 years. This including recent years where Google thought they can pull it off, now Google is investing in agency technology.
“Lemonade said it collects “100 times more data than traditional carriers,” enabling the company to generate highly predictive data and improve its underwriting and pricing.”
And yet in their “Super Transparency Chronicle” published Sept 20, 2018, they claim “data paucity” is a cause for their 130% loss ratio. It appears the business model was to come in with cheap premiums with the hope that they would gain market share and an edge with low expenses and someday earn out the upfront costs and pay back investors. To me, raising another $300M at this stage isn’t a sign of robust growth.
Lemonade said it collects “100 times more data than traditional carriers”. Oh really? And whence does this data come? Facebook? Twitter? Been Verified?. I’m sorry , but there’s not 100 times the data out there to be had. There just isn’t.
That aside, I feel like an dinosaur. These guys might just topple us. At first I thought they were a joke but now they worry me. Every business these days seems to be subjected to these “disrupters”. It scares an old man like me.
You raise $300M to go to Europe and elsewhere to sell insurance, because you haven’t shown yet you can do it profitably on your home turf. How long did it take Amazon to be a PROFITABLE company, not just a buzzword? Cashflow may work for selling books or booking rides, but in insurance you eventually have to have an underwriting profit or the regulators and rating agencies will see to your demise.
Automobile insurance is adversarial and litigious. AI will get you somewhere, but it won’t get you through trial. I suspect the low fruit has been harvested, and so far from a financial perspective its been lemons, not lemonade.
Do I worry about disruption in the insurance industry?Yes, absolutely. I recall disrupting the old timers before me with faxes and computer estimating tools, cell phones, remote printers, and applications installed on clunky laptops. And yet, the industry survived. As people head on-line, I think they’ll head back to agents or direct writers with live people who help them with their assets once they have them.
Of course, that’s just my opinion. I could be wrong…
I know Allianz — they’re a good, strong company. They would not invest in something where they could get a bigger benefit in a concrete, practical way. They are clear-eyed and pragmatic. My guess is most of the $300 M is for capital/surplus for support a SE carrier. This gives AZ a front row seat to European insurtech disruption — and the right to be first in line when Lemonade fails.