Challenger Insurers & the lemonade factor
Lemonade have posted their Q3 results with a net loss creeping towards $100m, a **** loss ratio of 94% counteracted by a 70% increase in GWP and premium in-force.
It shows how much attention is being paid on customer growth vs customer risk & claims costs.
I am not looking to question the strategy but is that the right balance? Yes, we see new tech firms and start-ups make losses all the time as they focus on growth. However, these companies base this on the fact they have large, untapped cross-sell and subscription based recurring revenue streams that can be relatively easily accessed without large increases to overall core operating expenditure. I am not sure that Lemonade has that without taking on more risk; and with that loss ratio do they really want to take on more risk? It will be interesting to see the staying power of these organisations or whether they get swept up by larger legacy insurers.
What do you think? See more here. https://www.insurancejournal.com/news/national/2022/11/18/695545.htm