Group is looking to disrupt industry dominated by a handful of traditional names.
Lower than expectations earlier in the year - the reason maybe that incumbent insurers have the means to compete and blunt Lemonade's progress.
In some ways Lemonade is becoming more like an incumbent insurer than a disrupter. Behind the digital, AI and automation glitz the nuts and bolts of the business have converged to the same mix of automation and human engagement as incumbent insurers.
It is all very well Lemonade proclaiming "Forget everything you know about insurance"
The hard reality of insurance is that you cannot do that. "70% of the total cash flow of an insurer flows through the claims department and fulfils the promise to indemnify insurance policy holders (PH).
Source: Marty Ellingsworth; Celent Report "Data Science in Claims- Digital Acceleration and Customer Delight" 15th June 2020
Lemonade is finding out that truth. Large loss claims need claims adjusters backed by world-class claims management technology to provide empathy and human support. Efficiency and effective engagement between customers, the insurer's teams and (usually forgotten in claims management systems) the supply chain. Incumbents recognise this and are transforming.
Customer satisfaction and logistical efficiencies must rise to the formidable heights achieved by Amazon.
Just as Amazon's distributions operations have many people so claims operations and supply chains involve many people. . However much you automate the process of selling and distributing insurance products and services customers will make claims and that is when incumbent insurers will be on a level playing field with Lemonade.
To claim for an item of clothing should be a process of seconds. All insurers can achieve that. But escape of water, fire and flood, subsidence and blocked drains are a different matter.
Technology will help considerably and whilst you can plan to reduce FTE call centre numbers by 50% and more over time ( converting call centres to true customer engagement centres) these claims adjusters, PI and fraud teams and supply chain management will be dealing with the complex rather than the mundane.
Insurers need a digital claims platform to compete with Lemonade that also transforms these other parts of the business.
In the past they can be forgiven for feeling that must involve $millions (tens and hundreds of $millions in some cases) , take years and lead to inflexibility and rapid obsolescence.
No more- digital claims and risk management platforms like 360SiteView deliver native-cloud and end-to-end solutions for all claims types and all geographies. No Capex and pay-as-you-go licensing with fast time to value mean insurers see results fast.
Take one national carrier that will have migrated all its home and motor business claims management to 360SiteView in 12 weeks! And NO CAPEX!
That insurer can compete head-to-head with Lemonade and out-compete on the whole book including complex claims.
They should be inspired by Lemonade which itself will innovate over the whole value chain. But they need not fear which is, perhaps, why the impressive valuation is lower than hoped for.
But investors have also grown wary of lossmaking consumer tech companies following a number of disappointing listings last year, kicked off by the ride-hailing company Uber, which is also backed by SoftBank.