Challenger Insurers & the lemonade factor

Alex_Johnson

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

Alan_Haskins

Coming into the end of the year, large legacy insurers on concerned about combined loss ratios, inflation, catastrophe loss, and unknown climate change factors. With this level of challenging risk, it's time to get back to the basics of underwriting sound risk and customer retention. Historically, legacy insurers could rely on earned investment income to out-pace new InsurTech's looking to take on additional risk to stay relevant in the market.