You can’t make a profit in the insurance game unless you take real risk. There just isn’t enough premium dollars otherwise. These guys have an expensive and elaborate organization so their problem isn’t losses, its expenses.
Tiger, 100% correct. The average agency premium for personal lines is probably around $3000 a year per customer with the average longevity of maybe 5 years ($15000 lifetime value). Lemonade has a retention rate of around 50%, their average lifetime value of a customer is going to be maybe ($300). The customer acquisition cost per policy cannot support this. It’s my belief the investors are the only relevant source of funds for this company and I can tell you, I am glad my money is not into this thing as I would not expect to see a dime out of this if I did invest in it. Those who invested say I will be wrong, but remember me in about two years.
About a year ago, i searched up a random address in NYC (mid-town of course), went to the Lemonade system, entered the data like I was really looking for and HO4 quote. I chat window popped up and a nice girl (well I don’t really know if it was a girl/boy or chatbot) and I advised “her” I was moving to NYC and needed some renters. Went through a few things with “her” and I got a quote. $98 for $20,000 Coverage C and $300,000 liability. It surely cost them $150 just to do the quote so, again, I can’t see how in the world they can possibly make any $ even if I did buy the policy and kept it for 5 years. I have spoken to their people in the past 12 months as they were toying with the idea of an independent outlet channel. The person I talked(some kind of Marketing VP) to had no clue about insurance, risk, rates, revenue, profit, losses, reserves, etc. She just kept talking about “exceptional customer experience” to which I replied, “That doesn’t really sell any insurance or make a profit”. She, of course, disagreed. They act like they are Google but without the revenue.
First, there is no legal insurance entity called an “InsurTech.” This is sloppy writing and sloppy editing.
Lemonade is an insurance firm. Period. They are a startup insurance firm but nevertheless, they are an insurance firm.
They will succeed or fail based on the metrics of the insurance lines of business they conduct commerce, currently Renter’s Insurance and eventually Homeowners Insurance if they follow-through with their intentions to move into Homeowners.
From their initial emergence on the insurance marketplace until now, I continue to wish them all the financial misfortune that is possible to happen to a firm.
Anyone who has entered the business with a “new way” of doing business has failed or had to adopt to the “old way” of doing business. Two glaring examples are GEICO and People’s Trust.
Buying market share for a mono-line, ZERO relationship business is not a winning formula. I also wish them and their investors everything that’s coming to them.
You can’t make a profit in the insurance game unless you take real risk. There just isn’t enough premium dollars otherwise. These guys have an expensive and elaborate organization so their problem isn’t losses, its expenses.
Tiger, 100% correct. The average agency premium for personal lines is probably around $3000 a year per customer with the average longevity of maybe 5 years ($15000 lifetime value). Lemonade has a retention rate of around 50%, their average lifetime value of a customer is going to be maybe ($300). The customer acquisition cost per policy cannot support this. It’s my belief the investors are the only relevant source of funds for this company and I can tell you, I am glad my money is not into this thing as I would not expect to see a dime out of this if I did invest in it. Those who invested say I will be wrong, but remember me in about two years.
About a year ago, i searched up a random address in NYC (mid-town of course), went to the Lemonade system, entered the data like I was really looking for and HO4 quote. I chat window popped up and a nice girl (well I don’t really know if it was a girl/boy or chatbot) and I advised “her” I was moving to NYC and needed some renters. Went through a few things with “her” and I got a quote. $98 for $20,000 Coverage C and $300,000 liability. It surely cost them $150 just to do the quote so, again, I can’t see how in the world they can possibly make any $ even if I did buy the policy and kept it for 5 years. I have spoken to their people in the past 12 months as they were toying with the idea of an independent outlet channel. The person I talked(some kind of Marketing VP) to had no clue about insurance, risk, rates, revenue, profit, losses, reserves, etc. She just kept talking about “exceptional customer experience” to which I replied, “That doesn’t really sell any insurance or make a profit”. She, of course, disagreed. They act like they are Google but without the revenue.
Isn’t losses yet. Remember they pay claims via an app, not adjusters…and they underwrite via an app and not underwriters. Only a matter a time.
I’ve never hears such BS in my life. I would buy a lottery ticket before I would invest in Lemonade
First, there is no legal insurance entity called an “InsurTech.” This is sloppy writing and sloppy editing.
Lemonade is an insurance firm. Period. They are a startup insurance firm but nevertheless, they are an insurance firm.
They will succeed or fail based on the metrics of the insurance lines of business they conduct commerce, currently Renter’s Insurance and eventually Homeowners Insurance if they follow-through with their intentions to move into Homeowners.
From their initial emergence on the insurance marketplace until now, I continue to wish them all the financial misfortune that is possible to happen to a firm.
Anyone who has entered the business with a “new way” of doing business has failed or had to adopt to the “old way” of doing business. Two glaring examples are GEICO and People’s Trust.
Buying market share for a mono-line, ZERO relationship business is not a winning formula. I also wish them and their investors everything that’s coming to them.