Yup, Lemonade is certainly has the advantage of being more flexible and nimble. I've spoken / worked with larger insurers and they are hampered by the amount of manual processes and bureaucracy that are typical for +50 year old corporations.
Lemonade's competitors also do most types of insurance, there aren't very many large private or public insurance companies that only focus on renters, homeowners, etc. The power is in the bundle and upselling a suite of insurance products to the customer you've already spent the CAC to acquire. With this comes more data to better underwrite deals, and the cycles goes on.
Lemonade has mentioned looking into niche products like pet, phone, etc. Sure, they can carve out a nice space for itself, but the reality of those products is its low premium, low addressable market stuff so its not the most efficient use of capital for large insurers.
One major piece Lemonade is also missing is the traditional float an insurance company has. Even if loss ratios + expenses are 100% of premiums, insurance companies can still generate returns on the massive amount of float these premiums generate every year.
Lemonade's competitors also do most types of insurance, there aren't very many large private or public insurance companies that only focus on renters, homeowners, etc. The power is in the bundle and upselling a suite of insurance products to the customer you've already spent the CAC to acquire. With this comes more data to better underwrite deals, and the cycles goes on.
Lemonade has mentioned looking into niche products like pet, phone, etc. Sure, they can carve out a nice space for itself, but the reality of those products is its low premium, low addressable market stuff so its not the most efficient use of capital for large insurers.
One major piece Lemonade is also missing is the traditional float an insurance company has. Even if loss ratios + expenses are 100% of premiums, insurance companies can still generate returns on the massive amount of float these premiums generate every year.