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I'd be really surprised if their entire risk was reinsured; that tends to lead to severe incentive misalignment since they would have every incentive to sell to
by h4nkoslo 10y ago
I'd be really surprised if their entire risk was reinsured; that tends to lead to severe incentive misalignment since they would have every incentive to sell to the riskiest customers they could find.
- nerdponx 10y agoGood point. Although again, adverse incentives on Lemonade's side are supposedly handled by the fact that they're a nonprofit.
- SmellTheGlove 10y agoI'd be really surprised if they could get reasonable terms to reinsure their book, good decision or not.