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During my school years, the staple lunch was often a peanut butter and jelly sandwich (although I personally preferred PBJ + Cheddar Cheese). The sandwich didn’t require refrigeration, and while it could be gooey and messy at times, it was generally always tasty. The insurtech results bear a resemblance to the fate of the PBJ—sometimes messy, sometimes tasty, and sometimes facing a world that changes so much that they are no longer allowed. The public markets currently seem to have an allergic reaction to these companies.

The first quarter of 2023 has proven to be a critical period for insurtech companies as they strive to disrupt the traditional insurance industry landscape. Root, Hippo, and Lemonade are among the leading names in this emerging market, and their 1Q23 results provide valuable insights, as well as mixed results, into their progress, areas for improvement, and the challenges they face compared to incumbent insurers. Their reliance on technology alone has not proven to be a sufficient catalyst to propel them into profitability or to capture significant market share.

Over the past 12 months, Lemonade, Root, and Hippo have exhibited varying degrees of revenue growth and continued net losses across the board. I particularly appreciate the 12-month trailing data, as it offers a comprehensive view of financial performance, taking into account seasonality and smoothing out quarterly fluctuations. A comparison of their revenues, net incomes, and general and administrative (G+A) expenses reveals intriguing insights into the growth trajectories and operational efficiency of these three insurtech companies.

It’s hard to believe, but all three companies are under 7 years old. If they don’t significantly alter their profitability, their cash on hand will only last 2 to 3 years. They will need everything to go right for them in order to pull through this challenging period.

12 Month Trailing Insurtech Results

Revenue Growth and Market Expansion

Lemonade has demonstrated consistent revenue growth, increasing from $97 million in 9/30/2020 to $308 million in 3/30/2023. Root Insurance, on the other hand, experienced a more fluctuating revenue trend. Root’s revenue peaked at $402 million on 9/30/2020 before declining and then gradually recovering to $296 million on 3/30/2023. Hippo’s revenue growth has been relatively steady, albeit at a slower pace compared to Lemonade, with an increase from $35 million in 9/30/2020 to $135 million in 3/30/2023.

Net Income and Profitability

Fueled by Tech-centric VCs, revenue growth was the target for these startups. And as we are all familiar with, this came at the expense of profitability.  That trend is continuing.  All three insurtechs have reported net losses over the 12-month period. Lemonade’s net income is nearly 3 times greater than what it was on 9/30/2020 increasing from a loss of $121 million in 9/30/2020 to a loss of $295 million in 3/30/2023. Root Insurance’s net income has fluctuated, but over the last year they have almost halved their losses from their peak loss of $545 million on 9/30/2021 to $253 million on 3/30/2023. However, Hippo’s net income has worsened over the period, with losses increasing from $83 million on 9/30/2020 to $328 million on 3/30/2023.

General and Administrative Expenses

Lemonade’s G+A expenses have consistently increased from $156 million on 9/30/2020 to $388 million on 3/30/2023, indicating a growing investment in operations and infrastructure. Root’s G+A expenses followed a more fluctuating pattern, peaking at $448 million on 9/30/2021 before declining to $191 million on 3/30/2023. Hippo’s G+A expenses have generally increased over the period, with some fluctuations, reaching $345 million on 3/30/2023.

In conclusion, Lemonade has shown the most consistent growth in terms of revenue but has been less successful in controlling net losses. Root Insurance has experienced fluctuations in both revenue and G+A expenses but has managed to reduce net losses over time. Hippo has shown steady revenue growth, but its net losses have continued to increase, which may be a cause for concern. The 12-month trailing data reveals that while these insurtechs have made progress in market expansion and revenue growth, they still face challenges in achieving profitability and controlling expenses.

The Imitation Game - The Power of Collaboration

Reflecting on the insurtech results, two movies come to mind: Moneyball and The Imitation Game. Moneyball tells the story of Oakland A’s general manager Billy Beane’s successful attempt to assemble a winning baseball team by leveraging data analytics and unconventional thinking to achieve success, all while spending less than his competitors. Insurtechs have utilized data in new and innovative ways (although not yet profitably). The Imitation Game highlights the groundbreaking work of Alan Turing in cracking the Enigma code during World War II through the development of an early computer. He accomplishes this feat through the power of collaboration and partnership. Most insurtechs have shifted from doing it alone to partnering with brokers or carriers. They now view their survival as being tied to the more ‘traditional’ market participants.

What can we learn from the insurtech results?

The insurtech revolution is well underway. Traditional brokerages and carriers that fail to adapt will be left behind. By investing in technology, becoming more customer-centric, being more innovative, and being more agile, traditional companies can strengthen their position and compete effectively in the future. Here are a few key takeaways:

  • Insurtechs are growing rapidly. Lemonade, Root, and Hippo have all experienced significant revenue growth over the past 12 months. This shows that there is a strong demand for innovative insurance products and services.
  • Insurtechs are using technology to improve efficiency. These companies are using technology to automate tasks, streamline processes, and improve customer service. This is helping them to reduce costs and improve profitability.
  • Insurtechs are disrupting the traditional insurance market. These companies are challenging the status quo by offering new products and services, using new technologies, and operating in new ways. This is forcing traditional insurers to adapt, or risk being left behind.

So, what can traditional companies do to strengthen their position in the face of this disruption? Here are a few suggestions:

  • Invest in technology and digital transformation. Traditional carriers and brokers need to invest in technology to stay competitive. The rapid revenue growth of insurtechs is, in part, due to their ability to leverage technology to streamline processes, enhance customer experience, and reduce operational costs. Incumbent insurers should invest in digital platforms and tools to automate manual tasks, optimize underwriting, and offer more personalized products and services to their customers.
  • Become more customer-centric. Insurtechs are putting the customer and now the broker at the center of their business.  Customer acquisition and retention strategies should be revisited. Insurtechs have demonstrated the ability to attract and retain customers through targeted marketing campaigns and innovative product offerings. Traditional players should identify new market segments, offer competitive pricing, and adapt to evolving customer and broker preferences to maintain and expand their customer base. Implementing customer and broker-centric solutions, such as easy-to-use mobile apps and efficient claims and quoting processing, can significantly improve customer satisfaction and loyalty.
  • Be more innovative. Insurtechs are constantly innovating new products and services. Risk management and underwriting practices must be updated to reflect the evolving insurance landscape. Insurtechs often use advanced analytics and machine learning algorithms to assess risks more accurately and offer personalized coverage. Traditional carriers should adopt similar technologies to refine their underwriting processes and improve risk assessment. Additionally, investing in data analytics can help insurers identify emerging risks and trends in the market, enabling them to develop new products and services tailored to customers’ needs.
  • Be more agile. Insurtechs can move quickly and nimbly to adapt to changes in the market. Review your cost structures and find ways to reduce general and administrative expenses. Insurtechs, despite their high G+A expenses, have managed to maintain relatively lean operations by leveraging technology and automation. Traditional carriers can benefit from adopting similar strategies, such as automating routine tasks, outsourcing non-core functions, and streamlining decision-making processes to reduce overhead costs and improve operational efficiency.
  • Collaborate and partner with Insurtechs. I have worked with many smaller carriers, and this has proven to be a very valuable strategy for them to strengthen their market position. By partnering with innovative insurtech companies, incumbent insurers can gain access to new technologies, expertise, and market insights. These partnerships can lead to the development of innovative insurance products, improved distribution channels, and enhanced customer experience, helping traditional insurers remain competitive in the rapidly changing industry landscape.


The insurtech landscape offers valuable lessons and opportunities for traditional insurance companies, including brokers and small regional carriers, to innovate and strengthen their market positions. Insurtech Advisors has a proven track record of working closely with regional carriers and brokers to harness the advances coming out of the insurtech ecosystem. Our expertise and deep understanding of the industry enable us to guide your company through the process of digital transformation and innovation.

At Insurtech Advisors, we recognize that each business is unique, and we tailor our approach to meet your specific needs. Our goal is to help you innovate quickly, saving you time and money by focusing your team on the right areas for your organization. By working with us, you can leverage our extensive knowledge of the insurtech landscape to adopt best practices, implement cutting-edge technologies, and develop customer and broker-centric solutions that drive growth and profitability.  Together, we can create a brighter future for your business, delivering unparalleled value to your customers and stakeholders.

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