The news follows on from the US-based insurtech’s announcement last week, that it had successfully completed a claim and payout in just two seconds – setting the insurance industry alight with discussion.
Lemonade launched in the UK in October 2022, and introduced a contents insurance product in collaboration with Aviva, a prominent insurance provider. Concurrently, the digital insurer joined the esteemed Association of British Insurers (ABI), solidifying its commitment to the UK market.
The granting of the carrier license by the PRA represents a significant milestone for Lemonade’s operations in the UK. It signifies the company’s adherence to regulatory requirements and underscores its long-term commitment to serving customers in the region. With this license in place, Lemonade is well-positioned to introduce a broader range of insurance offerings, leveraging its unique digital platform and AI-powered services.
Since its UK market entry, Lemonade has swiftly gained traction and disrupted the insurance landscape with its customer-centric approach and commitment to social impact. The partnership with Aviva has been instrumental in delivering innovative and affordable contents insurance solutions to UK residents. By joining the ABI, Lemonade has also demonstrated its dedication to industry collaboration and adherence to the highest standards of practice.
Lemonade
Lemonade also announced earlier this week that its its reinsurance programme has been renewed in good time and on good terms. The Lemonade programme is led by the same tier-one carriers as the expiring and was oversubscribed on all dimensions.
The centrepiece of the programme is 55% quota share protection, the same level as the expiring coverage. The variable ceding commissions are projected to be roughly equivalent to those enjoyed under the outgoing agreements. The program covers all Lemonade businesses globally, now also including Metromile, acquired by Lemonade in 2022.
“It says a great deal when some of the world’s largest and most respected reinsurers choose to stake their capital on the performance of our business,” said Daniel Schreiber, Lemonade co-CEO and cofounder. “These partners allow us to operate in a very capital light mode, and focus our resources on expanding our customer base across all of our products and geographies, while harnessing our technologies to get ever more efficient, and ever better at matching rate to risk.”
The renewed program is augmented by some new structures as well. For one, Lemonade has formed a new risk-bearing entity, Lemonade Re, in the Cayman Islands. Lemonade plans to hold some of its retained risk in Lemonade Re. Similarly, Lemonade has established a captive cell at a Bermuda transformer, and plans to utilize it to retain most of its windstorm exposure.
While windstorm reinsurance capacity was available, this structure was determined to offer a materially better cost/benefit profile. The extant program expires at midnight on June 30, 2023, at which time the new program will go into effect for a standard 12-month term. The Company’s financial expectations for Q2 and for the full year 2023, as communicated in the Q1 ‘23 Lemonade Letter to Shareholders, remain unchanged.
As Lemonade solidifies its position in the UK insurance market, industry observers anticipate further disruptive innovations and a continued focus on leveraging technology to enhance the customer experience. With its AI-driven platform and commitment to social good, Lemonade aims to reshape the traditional insurance landscape and empower customers with accessible and efficient insurance solutions.
