https://en.wikipedia.org/wiki/Mutual_insurance
https://en.wikipedia.org/wiki/The_Equitable_Life_Assurance_S...
Twitter? Blogging, but you can only write two sentences. That's shitty!
Vine? Video uploading, but you can only store a few seconds. That's shitty!
Snapchat? Chat, but your messages disappear after a few seconds. That's shitty!
Less is more, sometimes.
The question is why investors, who are supposed to be well informed, continue to back companies that know so little about the industries and markets they're operating in.
And the funny thing is, we do X but with lower costs/higher margins than existing companies A, B and C because Y is actually a compelling pitch...
I think that the OP is drawing issue with the fact that the title described it as "the world's first P2P insurance."
the Service Is Available “As Is.” YOU EXPRESSLY UNDERSTAND AND AGREE THAT: (a) YOUR USE OF THE SERVICE AND THE PURCHASE AND USE OF ANY PRODUCTS OR SERVICES ARE ALL AT YOUR SOLE RISK. THE SERVICE IS PROVIDED AND PRODUCTS ARE SOLD ON AN “AS IS” AND “AS AVAILABLE” BASIS. TO THE MAXIMUM EXTENT PERMITTED BY LAW, LEMONADE EXPRESSLY DISCLAIMS ALL WARRANTIES AND CONDITIONS OF ANY KIND, WHETHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO THE IMPLIED WARRANTIES AND CONDITIONS OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.
In other words, they are promising nothing. How then can you rely on them for insurance?
If anyone has gotten far enough with them, I'd love to see their actual insurance contract. I'm too lazy to go pull their state filings.
EDIT: Here's the part that troubles me more -
"GIVEBACK ... our stated intention is to calculate the amount of leftover money by subtracting from the group’s collective premium, our flat fee (currently 20%), the costs of claims, a “rainy day fund” and other insurance expenses like reinsurance – and giving back what’s left (up to 40% of the group’s premiums). ... "
That 20% "flat fee" is about 8% less than the industry standard expense ratio. That's pretty aggressive expense reduction, to the point where I'd wonder if they'll run out of money, or if they plan to write only the most preferred of preferred risk. I know it reads as though a "rainy day fund" and reinsurance are separate items, but a rainy day fund only happens if you run a surplus, and I'd be shocked if anyone is reinsuring this block at reasonable rates unless, again, (very) preferred risk - at which point you wouldn't want or need to reinsure.
I know it sounds odd, but as a startup, I'd be happier as both a potential customer and potential employee (both very hypothetical) if they called it 30% and undershot it. You don't want to run out of money. It's not an industry where you can just fire some employees unless you're really overstaffed, since service level declines drive complaints, and enough complaints and suits put you out of business.
EDIT 2: All of that said, I'm rooting for these guys. This industry needs modernization pretty bad. If they can make their 8% back from process and tech optimization, that's great. I'm not trying to be negative, I really want them to succeed.
As others related, this isn't a bug report. This is about the design of your conversion funnel and the appropriateness of what levels of information I will consent to offering while your site is attempting to build a relationship with me.
When you don't know me, you can have my zip code. Show me some awesome rates based on my zip code, and maybe then I'll give you my name or email address. I don't want to leave mouse droppings of personal information all over the internet unless I am intent on engaging with your company. Got it?
And here's the truth. I am in the process of examining and amending my insurance coverage because we are deleting a car. So you lost a qualified hot lead. So hand that data to your hippo.
Lloyd’s of London, Berkshire Hathaway’s National Indemnity, XL Catlin etc.
Basically they are buying a policy from one of those companies adding 20% and selling it to you.
A insurance company works by spreading risk over a large area. By selling everything in NY they are increasing their correlation which raises risk. One of the reasons for the sub prime crisis was no one expected housing to fall in all markets at the same time.
Reinsurance is basically insurance for the insurance co, for instance if a hurricane hits NYC and wipes out all of their policyholders at once.
(It's a bit complicated because there actually are many insurance co's that only sell insurance underwritten by a third party (although they may be able to offer lower price than buying from the third party directly because of how they target their customer base or handle claims), or sell insurance strictly on commission and outsource servicing claims, and there are varying forms of reinsurance that cover everything from huge tail risks to flat percentages of claims, or exotic circumstances like your corporate HQ burning down or massive lawsuits.)
If you're rental focused, stuff like hurricanes aren't as big a deal because most perils are excluded or out of scope. The roof is your landlord's problem.
For example if the probability of fire is 1%, but due to their limited geographical focus they were covering an entire building of 30 apartment and their coverage is 100 dollars well their rate should be 1 dollar + x%, but if their is a fire their payout will be 3000 dollars due to that correlation of all the apartments burning down. In that case the reinsurance company would have to cover that. If I were Berkshire I would have to price the policy higher for the increase risk.
In that sense, it's like a buyers club for insurance. Lloyd's isn't insuring every Lemonade customer individually, they're insuring the entire Lemonade business, which with enough buy-in becomes a very diversified risk pool.
And Geico's overhead is closer to 15%.
So... do what you want with that info.
However I made two mistakes. First, I selected personal property coverage that was probably too low. Second, I used a throwaway e-mail address to get my quote. I see no option in the app to modify either one. As I put in a support request for each item on the website, it occurred to me that I am probably screwed if anything goes wrong with my policy or claim. Yes, I am aware that there is an emergency hotline. But what happens if I'm no longer in an emergency? Insurance payouts can take a long time -- am I supposed to only ever interact with the company through a little "Help" popup on their website while I'm waiting for my check?
I'm also wondering: why is the actual interface to the application only available in a mobile app? What happens if my phone is damaged? Will I be forced to call the emergency hotline for even minor administrative tasks until I get a new phone? Is it that hard in 2016 to support web and mobile simultaneously?
Finally, I am sick to death of patronizing "I'm your friend" interactions with applications. The whole idea of "Maya" the robot assistant is goofy. It feels like a grown-up version of Smarterchild, and I get the same uncomfortable feeling "interacting" with Maya that I do when I'm trying to explain to a cheerful robot on the phone what I'm calling about.
You might have a hard time doing that.
I would like a non-profit that just pays back the spare money even more. I do not know how this would work with regulations. I guess in Germany this could be done through a "Genossenschaft", which Wikipedia tells me has an US equivalent called co-op. Would this actually work?
Edit: Realized that you could just grant discounts as there cannot be a profit anyway. Would be awesome to see several companies with the same model, first competing on prices and ultimately the percentage of the fixed fee.
Public social insurance is even more P2P than that as dues are calculated based on actual payouts. This is most pronounced in the mandatory worker's accident insurance where employers just pay their share (based on size and risk profile) of last year's claims in their sector.
Traditional insurance companies make their margins on the cash they have to hold on hand.
But the "P2P" branding is likely going to be confusing to a lot of people. In fact even after reading the explanation I still don't understand the peer to peer model in this context and I know what Peer to Peer means.
There are 8 steps to get a quote
1. First and last name 2. Full address 3. question (renter/owner) 4. roomates/alarm 5. current owner of insurance? 6. Jewelry over 1000$? 7. email, birthday 8. Quote, which seems highly generic and could be done without 6 of the 7 previous steps.
I can't even imagine the conversion rate from just checking it out to paying customer, it can't be too high at all (outside the founders circle).
ZipCode -> Quote should be the only step. The rest should happen after you convinced me about your value. By the way, don't email thisisridiculous@gmail.com, it's not really my email.
If you need all the steps (and I doubt it) at first, at least do something like what TypeForm are doing with a progress bar, explain a bit about why you need it etc...
Say the insurance conversion rate is somewhat similar to healthcare average around 9%, I am guessing you lose at least 40% that could have converted means you are left with something around 5-6% conversion rate. Not a sustainable business at this scale (IMHO of course).
There's no doubt that in order to be responsible, you need all of the information. We are in agreement on that. What I'm saying is you need to think of better ways to show the value and hook me before I go through all of the steps. Something simple 1-2 steps, later you can change that. It's worth an A/B test at least.
So using pension plans as an analogy, it's more like a pay as you go pension scheme, like Social Security, than a fully funded scheme where the capital is invested and the returns from investment pay expected payouts.
I guess the distinction is that since the leftover money is used to donate to causes, there's no buffer to handle any unusual payments in the scheme itself, and the scheme is insolvent immediately in any month where claims exceed payments. So any buffer has to come from the reinsurance contract, or from any equity capital invested in the entity writing the insurance contracts.
Is this accurate? Really interested if you tell me a little more about how you handle risk here.
What you're doing is charging a flat fee to enter into a policy which is underwritten by someone else. its not sharing, its not anything special, its just insurance with a fancy GUI.
how does that compare with the profit margins of a traditional insurance company?
I find that an interesting coincidence in this case...
I will just assume that your 20% doesn't include LAE unless you're writing super preferred risk.
“Our initial application to the department was to give the money back to consumers. They were not going to do it as the laws are currently drafted,” said Daniel Schreiber.
They also stated they're hoping/looking to change those laws.
[1] https://techcrunch.com/2016/09/21/less-exciting-than-beyonce...
In this case, you can look up the public filing at https://filingaccess.serff.com/sfa/home/NY (search for Lemonade as the company)
or here is a public dropbox folder. https://www.dropbox.com/sh/dc6daybikir92l1/AAAWWT6J0DfsPG7nA... of it
Expected Loss ratio is 50%.
Pricing structure is pretty standard.
Impressive! Good luck to you guys.
Not trying to poke holes, but this sounds so interesting to me. This sounds similar to syndicates on the investment side.
With So-Sure you link up with friends and are bonused if nobody claims. Of course that means nobody links with that friend that always loses their phone, which in theory reduces their risk and pays for the bonus.
There are charities and causes I do support and there are those that I don't. There are charities that oppose each other in their stated goals as well.
I see a section that talks about becoming a supported charity, but nothing about criteria or who is already in.
"Note, the Giveback is currently not recognized as a tax deductible donation- sorry!"
So it's actually worse than a standard mutual insurance dividend / rebate which you could donate yourself.
Go ahead and let me enter in my information and put me in some sort of potential new location queue-- get enough people near / around me, and you can start to decide where to support next.
Just a thought.
At least, I know of https://heyguevara.com/ is a P2P car insurance provider in the UK that is registered with the FSA and licensed to provide insurance products. They've been operating for a couple of years now.
However, those options are hilarious : http://imgur.com/a/r0aar
Didn't bother finishing.
