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> Luckily, Lemonade has smarter systems and got my location right, so I was able to get insured with them. But I'm not sure what I would do without lemonade. I

> Luckily, Lemonade has smarter systems and got my location right, so I was able to get insured with them. But I'm not sure what I would do without lemonade. Insurers with better information will be able to judge risk better, so they can undercut competitors on lower risk or avoid taking on higher risk. That really is what a competitive insurance market should be like right?

tshaddox 3y ago
Cute idea, but hopefully (for that customer) Lemonade’s systems aren’t so smart that they figure out that they’re the only insurer willing to sell to that address.
MajimasEyepatch 3y ago
In the long run, yes, but Lemonade and other insurtechs have struggled to actually get that right. Their loss ratio (claims paid / premium collected) has historically been close to or above 100% (i.e. losing money), though I think Lemonade has finally been getting that under control recently. Distribution is also a huge factor in who wins. You can have the best product, but if you can't get it out to enough people, whether direct to consumer or through agents, you're going to struggle. A lot of startups have focused on direct-to-consumer plays, but there's value in taking a hybrid approach to distribution and incorporating agents into your distribution strategy. It's surprising sometimes, for those of us with a tech background, to see how sticky human insurance agents have proven to be. I can make a better potato chip than Frito-Lay, but if I can’t get stores to stock it, it doesn’t matter how good it is.
mh- 3y ago
>That really is what a competitive insurance market should be like right? Should be. But states like California cap insurance rates in such a way that insurers are dropping (non-renewing) policies, since they can't charge market rates.
- rlt 3y ago
  I don’t understand how states like California don’t understand basic economics.
  - seanmcdirmid 3y ago
    California is one of the capitalistic states out there. But they have politicians, government, regulation, like any other state. Insurers are also rapidly leaving Florida, so it might not just be about regulation, or those two states do lots of regulation, or something in between.
    - cyanydeez 3y ago
      Its about reality. Both states should be.preventing public housing where reoccuring signifixant hazards effect populations. Instead, they.try to manipulate the insurance market.
      - tekknik 3y ago
        You have to define reoccurring and significant. Much of CA is on a fault line, so should everybody move to the desert where it’s scorching hot but a bit safer?
    - lostlogin 3y ago
      > so it might not just be about regulation Or is it about risk? Those places have a fair few large disasters, and one is sinking while denying it.
    - ransom1538 3y ago
      FL here. Florida was hit by a wave of roofing fraud. They are changing out the laws (which will make sense).
  - Spooky23 3y ago
    They do. HN commenters often over simplify complex issues.
- revlolz 3y ago
  It's because California pushes their FAIR plan which is expensive and has terrible coverage. It's a corrupt and unethical solution for the state to recoup its budget deficit.
  - ericd 3y ago
    Do you have evidence that they make money on their plan? My impression is that insurance of last resort isn’t cheap to provide, they’re only getting the people that were too high risk to qualify for a cheaper commercial plan.
    - revlolz 3y ago
      No, only my anecdote. The state is offering significantly reduced coverage for more than double the cost of previous coverage. Getting the state plan still requires you to get additional private coverage in order to satisfy mortgage insurance requirements. I think it would be impossible for a layman to just give you "evidence" that will fit whatever arbitrary checkbox is formally needed. I cannot fathom a way the state isn't profiting here and both the state and insurance companies are exposing homeowners to incredible burdens. Now you frame this like I am too high risk or people in this capacity are too high risk, but that is the whole problem. Insurance cos are inconsistently making these determinations and the state's governance is directly responsible for the lack of regulation and enforcement. Nothing in my area has changed, but the insurance company has enacted the equivalent of ex post facto evaluation due to the state of CA. As example, my roof in great condition, passed inspection when purchase property a few years ago. I don't have certificates or invoices for repairs done to it in the 50 years of my home's life because I've only owned the property for a few years. The insurance company canceled my insurance stating I refused to provide such an invoice. They also claimed I'm now in a dangerous fire zone (I'm not) which I wasn't a year ago. They also claimed to need invoice of repairs for my plumbing, which again, is in wonderful condition. They stated simply providing inspection receipts wouldn't cut it and expensive certificates were needed. Anyways, I doubt you will read this but it's ridiculous and I'm not the only one in this state going through it.
      - 3y ago
revlolz 3y ago
A terrible idea when the majority of insured have a requirement to their mortgage. This is an avenue that actually warrants government intervention in the form of regulation. In my case the carrier willfully misinterpreted a map's fire risk in order to cancel me because they want to manipulate higher prices and the government has skin in the game with their own expensive, low coverage, crap plan. Government intervention in the form of state sponsored competition has bred corruption.
remram 3y ago
If Google is right 98% of the time, companies might find it not worth the cost to develop and use a better system, leaving the 2% of people caught in the crack unable to get basic services as all companies go off of Google's data. This is a huge fairness problem.
- tekknik 3y ago
  This problem exists across the board, and it’s due to people using, and in some cases abusing, statistics. Instead of using statistics/probability to answer questions, we should instead not use it at all or have a limit on how much a decision can be made based on chance.

tshaddox 3y ago

Cute idea, but hopefully (for that customer) Lemonade’s systems aren’t so smart that they figure out that they’re the only insurer willing to sell to that address.

MajimasEyepatch 3y ago

In the long run, yes, but Lemonade and other insurtechs have struggled to actually get that right. Their loss ratio (claims paid / premium collected) has historically been close to or above 100% (i.e. losing money), though I think Lemonade has finally been getting that under control recently. Distribution is also a huge factor in who wins. You can have the best product, but if you can't get it out to enough people, whether direct to consumer or through agents, you're going to struggle. A lot of startups have focused on direct-to-consumer plays, but there's value in taking a hybrid approach to distribution and incorporating agents into your distribution strategy. It's surprising sometimes, for those of us with a tech background, to see how sticky human insurance agents have proven to be. I can make a better potato chip than Frito-Lay, but if I can’t get stores to stock it, it doesn’t matter how good it is.

mh- 3y ago

>That really is what a competitive insurance market should be like right? Should be. But states like California cap insurance rates in such a way that insurers are dropping (non-renewing) policies, since they can't charge market rates.

rlt 3y ago
I don’t understand how states like California don’t understand basic economics.
- seanmcdirmid 3y ago
  California is one of the capitalistic states out there. But they have politicians, government, regulation, like any other state. Insurers are also rapidly leaving Florida, so it might not just be about regulation, or those two states do lots of regulation, or something in between.
  - cyanydeez 3y ago
    Its about reality. Both states should be.preventing public housing where reoccuring signifixant hazards effect populations. Instead, they.try to manipulate the insurance market.
    - tekknik 3y ago
      You have to define reoccurring and significant. Much of CA is on a fault line, so should everybody move to the desert where it’s scorching hot but a bit safer?
  - lostlogin 3y ago
    > so it might not just be about regulation Or is it about risk? Those places have a fair few large disasters, and one is sinking while denying it.
  - ransom1538 3y ago
    FL here. Florida was hit by a wave of roofing fraud. They are changing out the laws (which will make sense).
- Spooky23 3y ago
  They do. HN commenters often over simplify complex issues.
revlolz 3y ago
It's because California pushes their FAIR plan which is expensive and has terrible coverage. It's a corrupt and unethical solution for the state to recoup its budget deficit.
- ericd 3y ago
  Do you have evidence that they make money on their plan? My impression is that insurance of last resort isn’t cheap to provide, they’re only getting the people that were too high risk to qualify for a cheaper commercial plan.
  - revlolz 3y ago
    No, only my anecdote. The state is offering significantly reduced coverage for more than double the cost of previous coverage. Getting the state plan still requires you to get additional private coverage in order to satisfy mortgage insurance requirements. I think it would be impossible for a layman to just give you "evidence" that will fit whatever arbitrary checkbox is formally needed. I cannot fathom a way the state isn't profiting here and both the state and insurance companies are exposing homeowners to incredible burdens. Now you frame this like I am too high risk or people in this capacity are too high risk, but that is the whole problem. Insurance cos are inconsistently making these determinations and the state's governance is directly responsible for the lack of regulation and enforcement. Nothing in my area has changed, but the insurance company has enacted the equivalent of ex post facto evaluation due to the state of CA. As example, my roof in great condition, passed inspection when purchase property a few years ago. I don't have certificates or invoices for repairs done to it in the 50 years of my home's life because I've only owned the property for a few years. The insurance company canceled my insurance stating I refused to provide such an invoice. They also claimed I'm now in a dangerous fire zone (I'm not) which I wasn't a year ago. They also claimed to need invoice of repairs for my plumbing, which again, is in wonderful condition. They stated simply providing inspection receipts wouldn't cut it and expensive certificates were needed. Anyways, I doubt you will read this but it's ridiculous and I'm not the only one in this state going through it.
    - 3y ago

revlolz 3y ago

A terrible idea when the majority of insured have a requirement to their mortgage. This is an avenue that actually warrants government intervention in the form of regulation. In my case the carrier willfully misinterpreted a map's fire risk in order to cancel me because they want to manipulate higher prices and the government has skin in the game with their own expensive, low coverage, crap plan. Government intervention in the form of state sponsored competition has bred corruption.

remram 3y ago

If Google is right 98% of the time, companies might find it not worth the cost to develop and use a better system, leaving the 2% of people caught in the crack unable to get basic services as all companies go off of Google's data. This is a huge fairness problem.

tekknik 3y ago
This problem exists across the board, and it’s due to people using, and in some cases abusing, statistics. Instead of using statistics/probability to answer questions, we should instead not use it at all or have a limit on how much a decision can be made based on chance.