> If there's money leftover, we give it back to causes
I grabbed that quote from the web site. With State Farm if there is money left over they give it back. While donating to causes is great, since you want to avoid doing that it just looks like marketing.
We've really bad fires in CA in the last few years. I think claims were in the $12B range from the 2018 fires. What happens to Lemonade when there is a mass causality like this and many insured make claims at the same time?
I'm not too knowledgeable about insurance in general, but from the S1 they say "At Lemonade, excess claims are generally offloaded to reinsurers". So, I'd assume if too many people start making claims, they themselves have insurance against that happening.
They are betting on the federal government stepping in. It's somewhat understood that it's impossible to insure against natural disasters of that scale. The payouts for normal fires or car accidents in an average year is predictable over the claim term.
Natural disasters don't work that way. Insurance companies might go 10 years without a major claim, then suddenly there's a major disaster and 10% of their customers have claims that far exceed the value collected by the policies over several terms.
I grabbed that quote from the web site. With State Farm if there is money left over they give it back. While donating to causes is great, since you want to avoid doing that it just looks like marketing.
We've really bad fires in CA in the last few years. I think claims were in the $12B range from the 2018 fires. What happens to Lemonade when there is a mass causality like this and many insured make claims at the same time?