Well, I have to say, auto insurance is one area insuretechs can succeed. The business model is so successful and duplicable that anyone with the financial and technical wherewithal can copy it and make some $
On the other hand homeowners, CGL, BOP, commercial property, commercial excess, etc. are not working because well, no one has really figured it out.
The problem is that is seems like insurtech’s competitive advantage is boundless venture capital which they use to buy business at a loss (see Root). Their business model is grow until the IPO, cash out, and leave regular investors to pick up the pieces. Eventually, the music stops and they have to be a profitable company. I don’t know of any insurtechs that are truly profitable enough to stand on their own.
I agree with that and yes, they will try and spend the money to grow by marketing and under pricing until it hurts (financially). And the companies that are doing well with the algorithmic approach have massive financial wherewithal: State Farm, Allstate, GEICO, Progressive, Travelers et al So the approach to underwriting and claims payment practices are easy to copy and, to your point, have the cash to Lemonade into position to capture enough policies to make a go of it is something else entirely.
I wonder if these losses are going to be completely reinsured leaving them with just 25% of the revenue to actually run the company. When they’re losing hundreds of dollars for every policy they acquire I’m sure they’ll make it up in volume.
What a name……Lemonade!!! If they insure enough lemons will they make lemonade? Its going to be a tight squeeze for them to survive. Another group of tekkie snowflakes and indiscriminate vulture capitalists who are naive to the doom that awaits them.
Lemonade will be remembered as one of the leading change agents for how insurance is distributed in the future.
You do realize that whatever these InsurTech companies are doing impacts the entire ecosystem. State Farm, Allstate, Progressive, Travelers all are very much plugged into the innovation going on around them. They are adapting and taking on the customer experience successes that InsurTech’s are providing. These “snowflakes” are building something from the ground up and not just relying on taking over their fathers insurance book. Auto, Home, Small Business Insurance will all be distributed digitally via brands like Intuit, Amazon, Walmart, Costco and others. Majority of people would work with Popular Trusted Brands they already do business with in some capacity. There is a reason why Amazon keeps expanding their offerings. Because it works. Insurance is a very compelling opportunity for residual incomes. Not to mention the power these large brands hold when negotiating with carriers and in the future creating custom products.
Agents a piece of advice – begin to move up market or there will be pain in the near future.
You’re getting into antitrust territory with Amazon and others trying to control too many markets. Someday the regulators will wake up, but right now, these companies are running the country due to their wealth.
That’s what they said about real estate agents, so yes Zillow and Trulia changed the market but you still need “people” to help the client. Realtors, Car Dealers to name a few predicted 20 years ago to be dinosaurs are stronger than ever. Successful agents acknowledge and recognize their competition and provide a value proposition. Insurtech companies are not new.
Technology pundits (aka nerds) were predicting the demise of insurance agents as far back as the early 90’s and, despite the advent of handheld technology to usher in this radical change, the distribution needle hardly moved.
Fact is, insurance is one of those things that consumers understand the least and hate paying for the most. Agents fulfill the need and always will . . . .
I’ve posted this before. The computer guys (nerds) think there is a technology solution for everything. But, as we have seen so far, the “Tech” part is great, it’s the “Insure” part of InsurTech that is still nearly impossible, especially without people. The business model for auto insurance is there so Lemonade should do OK in this area but not much else.
The irony . . . lemons and cars! I wish them all the best in this new endeavor and will be selling my remaining holdings before this launch.
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The problem is that is seems like insurtech’s competitive advantage is boundless venture capital which they use to buy business at a loss (see Root). Their business model is grow until the IPO, cash out, and leave regular investors to pick up the pieces. Eventually, the music stops and they have to be a profitable company. I don’t know of any insurtechs that are truly profitable enough to stand on their own.
Roughly $800 to acquire a customer that yields a sub $400 premium that you’ve ceded 75% of. No way the math works.
I agree with that and yes, they will try and spend the money to grow by marketing and under pricing until it hurts (financially). And the companies that are doing well with the algorithmic approach have massive financial wherewithal: State Farm, Allstate, GEICO, Progressive, Travelers et al So the approach to underwriting and claims payment practices are easy to copy and, to your point, have the cash to Lemonade into position to capture enough policies to make a go of it is something else entirely.
I wonder if these losses are going to be completely reinsured leaving them with just 25% of the revenue to actually run the company. When they’re losing hundreds of dollars for every policy they acquire I’m sure they’ll make it up in volume.
What a name……Lemonade!!! If they insure enough lemons will they make lemonade? Its going to be a tight squeeze for them to survive. Another group of tekkie snowflakes and indiscriminate vulture capitalists who are naive to the doom that awaits them.
Hidden due to low comment rating. Click here to see.
You’re getting into antitrust territory with Amazon and others trying to control too many markets. Someday the regulators will wake up, but right now, these companies are running the country due to their wealth.
That’s what they said about real estate agents, so yes Zillow and Trulia changed the market but you still need “people” to help the client. Realtors, Car Dealers to name a few predicted 20 years ago to be dinosaurs are stronger than ever. Successful agents acknowledge and recognize their competition and provide a value proposition. Insurtech companies are not new.
Technology pundits (aka nerds) were predicting the demise of insurance agents as far back as the early 90’s and, despite the advent of handheld technology to usher in this radical change, the distribution needle hardly moved.
Fact is, insurance is one of those things that consumers understand the least and hate paying for the most. Agents fulfill the need and always will . . . .
I’ve posted this before. The computer guys (nerds) think there is a technology solution for everything. But, as we have seen so far, the “Tech” part is great, it’s the “Insure” part of InsurTech that is still nearly impossible, especially without people. The business model for auto insurance is there so Lemonade should do OK in this area but not much else.