{"id":2494,"date":"2018-01-24T00:54:40","date_gmt":"2018-01-24T00:54:40","guid":{"rendered":"\/blog\/?p=2494"},"modified":"2024-11-04T10:15:02","modified_gmt":"2024-11-04T10:15:02","slug":"2017-transparency-chronicle","status":"publish","type":"post","link":"https:\/\/www.lemonade.com\/blog\/2017-transparency-chronicle\/","title":{"rendered":"2017 Edition Transparency Chronicle"},"content":{"rendered":"

In late 2016 we were nervous as hell. We were about to launch a challenge to a $3 trillion industry, and it was anyone’s guess how we\u2019d be received.<\/span><\/p>\n

Within 48 hours, feedback from users and influencers allayed our worst fears.<\/span><\/p>\n

\"\"<\/p>\n

But as the hours turned to days, and days to weeks, questions remained. A full year\u2019s worth of data now offers some answers, and what follows are the highlights, and lowlights, of 2017.<\/span><\/p>\n

1. “Nobody will trust a company called \u2018Lemonade\u2019!\u201d<\/h3>\n

A major early question was whether a newborn company, with a juvenile name, could engender the necessary trust for <\/span>insurance<\/span><\/i>. Everything was riding on our contrarian theory: that Lemonade\u2019s newness and uniqueness would make it <\/span>more trustworthy<\/span><\/i>, not less.<\/span><\/p>\n

You see, traditional insurers often equate trustworthiness with financial strength, which they project by erecting monumental buildings that dominate the skyline.<\/span><\/p>\n

\"\"<\/p>\n

Skyscrapers weren\u2019t within our budget, but in any event we believed such extravagance sends the wrong signal. People worry their insurer lacks the <\/span>will<\/span><\/i> to pay, not the means. \u00a0So we established Lemonade as a Public Benefit Corporation<\/a>, with a view to signaling something very different. We hoped today\u2019s consumers would find our approach refreshing and trustworthy. <\/span><\/p>\n

The data suggest that they have. <\/span><\/p>\n\t

\r\n\t\t
\r\n\t\t\t

<\/i>Since Jan 1 2017, Lemonade insured over 100,000 homes, with our members entrusting us to insure them against over $15 billion of losses.<\/a><\/i><\/p>\r\n\t\t<\/div>\r\n\t\t

<\/i>Tweet this!<\/span><\/a><\/div>\r\n\t<\/div>\r\n \n

Our total sales for 2017 topped $10 million, with ~5% of our sales materializing in the first quarter, and over 50% in the fourth. This means our sales are on a strong and exponential growth curve.<\/span><\/p>\n

\"Lemonade<\/p>\n

On launch day, we thought of our team as pioneers and true believers. But after our first year, we know it is our community of over 100 thousand who deserve those accolades. It is they who entrusted billions to a brand new insurer, and it is that trust that is powering the change. \u00a0<\/span><\/p>\n

Which brings us to the second thing we now know. <\/span>We know our customers<\/span><\/i>.<\/span><\/p>\n

2. \u201cBeing the cheapest attracts customers\u200a\u2014\u200abut the <\/b>wrong<\/i><\/b> customer\u201d<\/b><\/h3>\n

The boogeyman in insurance is called \u2018adverse selection.\u2019 As an insurer, you set your price based on what a customer should cost you <\/span>on average<\/span><\/i>. But if instead of attracting average customers, you attract the kind that switch frequently, or claim excessively, you\u2019re selling at a loss, and your days are numbered. It\u2019s a particular threat to price-leaders.<\/span><\/p>\n

\"Non-believers<\/p>\n

And we were determined to be a price-leader. \u00a0<\/span><\/p>\n

But while we architected our business for <\/span>value<\/span><\/i>, we also architected it for <\/span>values<\/span><\/i> – and it was important to us that our customers appreciate <\/span>both<\/span><\/i>. Value <\/span>alone<\/span><\/i> selects adversely, but <\/span>values select advantageously. \u00a0<\/span><\/i><\/p>\n

We breathed a sigh of relief when customers tweeted about Lemonade\u2019s low-prices a lot, but about its B-Corp and Giveback<\/a> even more. It was an encouraging early data point. <\/span><\/p>\n

\"Tweets<\/p>\n

As more data came in during the course of the year, our assessment of the \u2018adverse selection\u2019 threat became more rigorous. See, throughout the many decades, the insurance industry has learned people\u2019s education and job are highly predictive of what kind of risk they represent. If Lemonade\u2019s customers were \u2018below average\u2019 by these measures, we\u2019d have a problem, no matter what our Twitter feed said. <\/span><\/p>\n

Good news: they are not<\/span><\/i>. <\/span><\/p>\n

The stats on Lemonade customers (who, by the way, are 50:50 male and female<\/a>) suggest our members are more than 100% <\/span>over-indexed<\/span><\/i> for both graduate degrees and really high paying jobs. All this notwithstanding the fact that 75% of our members are under the age of 35!<\/span><\/p>\n

The upshot: Lemonade is attracting the next generation of <\/span>outstanding<\/span><\/i> insurance customers.<\/span><\/p>\n