{"id":2376,"date":"2021-08-05T12:44:12","date_gmt":"2021-08-05T16:44:12","guid":{"rendered":"https:\/\/insurtechadvisors.com\/?p=2376"},"modified":"2021-08-05T12:44:12","modified_gmt":"2021-08-05T16:44:12","slug":"insurtech-lemonades-2q21-results-how-to-scale-premium-and-expenses-at-the-same-time","status":"publish","type":"post","link":"https:\/\/insurtechadvisors.com\/old\/2021\/08\/05\/insurtech-lemonades-2q21-results-how-to-scale-premium-and-expenses-at-the-same-time\/","title":{"rendered":"Insurtech Lemonade&#8217;s 2Q21 Results:  How to scale premium and expenses at the same time"},"content":{"rendered":"<div class=\"wpb-content-wrapper\"><p>[vc_row][vc_column][vc_column_text]<\/p>\r\n<p>The most successful <strong>Insurtech<\/strong> on the public markets, <strong>Lemonade<\/strong>, announced its results for the second quarter. It is a story of an improving and growing but highly unprofitable business, increasing its customer base by 10% to 1.2 million. At the same time, they increased their premium by 18% to $297 million. The result of this is reflected in the fact that their average premium is now $246. Much of this is driven by the fact that they have diversified their product mix in the following ways:<\/p>\r\n<ul>\r\n<li><span style=\"font-size: 1rem;\">Renters: 56% or $166M<\/span><\/li>\r\n<li><span style=\"font-size: 1rem;\">Homeowners: 30% or $89M<\/span><\/li>\r\n<li><span style=\"font-size: 1rem;\">Pets: 13% or $39M<\/span><\/li>\r\n<li><span style=\"font-size: 1rem;\">Life: 1% or $3M<\/span><\/li>\r\n<\/ul>\r\n\r\n\r\n\r\n<figure class=\"wp-block-gallery columns-1 is-cropped wp-block-gallery-2 is-layout-flex wp-block-gallery-is-layout-flex\">\r\n<figure><img decoding=\"async\" width=\"680\" height=\"233\" class=\"wp-image-2381 lazyload\" data-src=\"https:\/\/insurtechadvisors.com\/old\/wp-content\/uploads\/2021\/08\/Lemonade-2q21-SM-2.png\" alt=\"\" data-id=\"2381\" data-full-url=\"https:\/\/insurtechadvisors.com\/old\/wp-content\/uploads\/2021\/08\/Lemonade-2q21-SM-2.png\" data-link=\"https:\/\/insurtechadvisors.com\/old\/?attachment_id=2381\" data-srcset=\"https:\/\/insurtechadvisors.com\/old\/wp-content\/uploads\/2021\/08\/Lemonade-2q21-SM-2.png 680w, https:\/\/insurtechadvisors.com\/old\/wp-content\/uploads\/2021\/08\/Lemonade-2q21-SM-2-300x103.png 300w\" data-sizes=\"(max-width: 680px) 100vw, 680px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 680px; --smush-placeholder-aspect-ratio: 680\/233;\" \/>\r\n<figcaption class=\"blocks-gallery-item__caption\">Insurtech Lemonade Results<\/figcaption>\r\n<\/figure>\r\n<\/figure>\r\n\r\n\r\n\r\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e9499f399c5\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e9499f399c5\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/insurtechadvisors.com\/old\/2021\/08\/05\/insurtech-lemonades-2q21-results-how-to-scale-premium-and-expenses-at-the-same-time\/#Customer_Distribution\" >Customer Distribution<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/insurtechadvisors.com\/old\/2021\/08\/05\/insurtech-lemonades-2q21-results-how-to-scale-premium-and-expenses-at-the-same-time\/#Revenue_and_Expenses\" >Revenue and Expenses<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/insurtechadvisors.com\/old\/2021\/08\/05\/insurtech-lemonades-2q21-results-how-to-scale-premium-and-expenses-at-the-same-time\/#Why_the_public_market_loves_Lemonade\" >Why the public market loves Lemonade<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/insurtechadvisors.com\/old\/2021\/08\/05\/insurtech-lemonades-2q21-results-how-to-scale-premium-and-expenses-at-the-same-time\/#What_to_do_about_Lemonade\" >What to do about Lemonade<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Customer_Distribution\"><\/span>Customer Distribution<span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n\r\n<p>When trying to link premium growth to premium distribution to the customer, I came up with the following.<\/p>\r\n\r\n\r\n\r\n<figure class=\"wp-block-gallery columns-1 is-cropped wp-block-gallery-3 is-layout-flex wp-block-gallery-is-layout-flex\">\r\n<figure><img decoding=\"async\" width=\"1021\" height=\"309\" class=\"wp-image-2383 lazyload\" data-src=\"https:\/\/insurtechadvisors.com\/old\/wp-content\/uploads\/2021\/08\/Lemonade-2q21-customer-mix.png\" alt=\"\" data-id=\"2383\" data-full-url=\"https:\/\/insurtechadvisors.com\/old\/wp-content\/uploads\/2021\/08\/Lemonade-2q21-customer-mix.png\" data-link=\"https:\/\/insurtechadvisors.com\/old\/?attachment_id=2383\" data-srcset=\"https:\/\/insurtechadvisors.com\/old\/wp-content\/uploads\/2021\/08\/Lemonade-2q21-customer-mix.png 1021w, https:\/\/insurtechadvisors.com\/old\/wp-content\/uploads\/2021\/08\/Lemonade-2q21-customer-mix-300x91.png 300w, https:\/\/insurtechadvisors.com\/old\/wp-content\/uploads\/2021\/08\/Lemonade-2q21-customer-mix-768x232.png 768w\" data-sizes=\"(max-width: 1021px) 100vw, 1021px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1021px; --smush-placeholder-aspect-ratio: 1021\/309;\" \/><\/figure>\r\n<\/figure>\r\n\r\n<p>It seems that they are still recruiting renters, selling pet insurance, and reaching far fewer homeowners.<\/p>\r\n<!-- \/wp:post-content -->\r\n\r\n<!-- wp:heading -->\r\n<h2><span class=\"ez-toc-section\" id=\"Revenue_and_Expenses\"><\/span>Revenue and Expenses<span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<!-- \/wp:heading -->\r\n<p><!-- wp:paragraph -->The cost of acquiring Lemonade customers is still too high to be sustainable. They attract a new customer for $302, but only earn $246 in premium for that customer in the first year. Their gross revenue of $28 million earned them $23 per customer per quarter or just under $100 per year. Simply put, they spend 3 times more on acquiring a customer than the gross revenue they generate in a year. They had a net loss of $55.6 million. \u00a0For every dollar they earn, they lose two.<\/p>\r\n<!-- \/wp:paragraph -->\r\n<p><!-- wp:paragraph -->Lemonade&#8217;s premium retention rate has stabilized at 80%, but given its current spending profile, this is also contributing to its economic challenge.<\/p>\r\n<h2><span class=\"ez-toc-section\" id=\"Why_the_public_market_loves_Lemonade\"><\/span>Why the public market loves Lemonade<span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:heading \/-->\r\n<p><!-- wp:paragraph -->When you think about why Lemonade was positively received by the public market and why Root, Metromile and Hippo had a greater challenge, one thing becomes clear: Lemonade began with a product that ignored the legacy of carriers. It was an &#8220;accommodation product.&#8221; They needed something to offer their agents and policyholders whose children moved out of the house. They paid no attention to the product. They did not modernize the product or the way it was sold until Lemonade gained a market presence.<\/p>\r\n<!-- \/wp:paragraph -->\r\n<p><!-- wp:paragraph -->They were able to capture the minds of the new consumers and built up a kind of cult brand following that allowed them to position themselves as leaders in the minds of investors and the renting public.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:heading -->\r\n<h2><span class=\"ez-toc-section\" id=\"What_to_do_about_Lemonade\"><\/span><strong>What to do about Lemonade<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<!-- \/wp:heading -->\r\n<p><!-- wp:paragraph -->The biggest lesson is that if you have products that have not been modernized for many years, you should start to deal with it. This can be either by reworking the product or even by white labeling someone else&#8217;s more modern product. This last point allows you a source of income without the capital implications. Which might be beneficial for some products. More importantly, it will allow you to focus your capital on the products where you have a strong competitive advantage.<\/p>\r\n<!-- \/wp:paragraph -->\r\n<p><!-- wp:paragraph -->Please reach out if you have any questions or comments or want to discuss anything else related to the recent Insurtechs going public or what other Insurtech areas are seeing traction.<\/p>\r\n<!-- \/wp:paragraph -->\r\n\r\n<!-- wp:paragraph \/-->\r\n<p><strong>Insurtech Advisors<\/strong> helps regional insurance carriers and agencies to partner with the best Insurtechs that will enable you to succeed and continue to meet the needs of your members, staff, and independent agents. We know your business, and we know the Insurtech landscape.\u00a0 We save you countless hours of wasted time and false starts.\u00a0 We work closely with your team to identify opportunities and objectives and then personally curate for you and introduce you to the best Insurtechs to pilot.<\/p>\r\n<!-- \/wp:paragraph -->\r\n<p>&nbsp;<\/p>\r\n<p>[\/vc_column_text][\/vc_column][\/vc_row]<\/p><\/div>","protected":false},"excerpt":{"rendered":"<p class=\"card-text\">[vc_row][vc_column][vc_column_text] The most successful Insurtech on the public markets, Lemonade, announced its results for the second quarter. It is a story of an improving and growing but highly unprofitable business, increasing its customer base by 10% to 1.2 million. At the same time, they increased their premium by 18% to $297 million. The result of [&#8230;]<\/p>\n<p class=\"m-0\"><a class=\"btn btn-outline-secondary btn-read-more\" href=\"https:\/\/insurtechadvisors.com\/old\/2021\/08\/05\/insurtech-lemonades-2q21-results-how-to-scale-premium-and-expenses-at-the-same-time\/\">Read More<\/a><\/p>\n","protected":false},"author":1,"featured_media":2381,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","content-type":"","wds_primary_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2376","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/posts\/2376","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/comments?post=2376"}],"version-history":[{"count":0,"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/posts\/2376\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/media\/2381"}],"wp:attachment":[{"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/media?parent=2376"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/categories?post=2376"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/tags?post=2376"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}