Tag Archives: new york

Lemonade’s Crazy Market Share

It’s the craziest thing: In the State of New York, Lemonade appears to have overtaken Allstate, GEICO, Liberty Mutual, State Farm and the others in what is probably the single most critical market share metric of all.

But I’m getting ahead of myself.

Our story starts a few months back, when a few digits in a tedious insurance report woke me with a jolt: “723,030.”

Why the drama? 723,030 was the number of New Yorkers with renters insurance, and Lemonade had sold way more than 7,230 renters policies to New Yorkers. The upshot: We captured more than 1% market share in just a few months.

That seemed crazy.

In homeowners insurance in the U.S., a 1.6% market share makes you a top 10 insurance company. And this exclusive club has been at it, on average, for 104 years. Lemonade launched in September.

See also: Lemonade Reports: ‘Our First 100 Days’  

I went to my shelf, pulled my copy of “Microtrends” and highlighted its punchline:

“It takes only 1% of people making a dedicated choice — contrary to the mainstream’s choice — to create a movement that can change the world.” (xiv)

Then It Got Crazier

No sooner had we come back down to Earth, when a new study suggested that our “movement” was on the move. This survey, dated April 2017, updated Lemonade’s NY market share to a crazier 4.2% (E:+2.1/-1.4).

Note that while our market share numbers are from dependable sources (reports by regulators, surveys by Google), differing methodologies and timeframes make a conclusive number hard to pin down. That’s just fine by us. For one, we’re growing fast, making any precise number passé by the time it’s computed. For another, “overall market share” — whatever the number — misses the craziest part.

The Craziest Part

Most New Yorkers got their insurance policy before Lemonade existed. That means that “overall market share” pits our few months of sales against sales made by legacy carriers in the decades before we launched. Which raises the question: What’s our market share among New Yorkers who entered the market since we did? What’s our share of brand new policies?

Looks Like We’re Number One

It’s totally crazy but also totally logical. Given that about 90% of the market bought their policy before we launched, it stands to reason that our “brand new” market share will be about 10x our “overall” market share.

Logic is nice, of course, but it’d be better if there was some empirical evidence to back it up.

There is. A second survey broke down marketshare based on when people first bought insurance and found that Lemonade’s market share among first time buyers is more than 27%!

27% share among newcomers to insurance! You don’t need clairvoyance to see the predictive power of that metric. Nothing foretells tomorrow’s “overall” market share like today’s “brand new” market share.

Note that the margin of error in the survey is wide (+12.6/-9.8), so our true “brand new” marketshare could be as little as 18%. Again, I’m not spending any time narrowing the range. Pick any point within the margin of error, and the thrust of the story is unchanged: It’s crazy.

Crazy Is the New Normal

Lemonade is growing exponentially, and today’s subscriber base is more than 2X what it was when those surveys ran 10 weeks ago. In fact, new bookings have doubled every 10 weeks since launch and show no sign of letting up.

But exponential growth isn’t the craziest part. The craziest part is that, even if that acceleration stopped, even if we just maintained the status quo from April, within a few years our overall market share would automatically climb to match our “brand new” market share.

That’s what “brand new: market share means; and that’s why it’s probably the single most critical metric of all. Today’s crazy is tomorrow’s normal.

See also: Lemonade: From Local to Everywhere  

I know: We’re still tiny, and incumbents won’t stand idly by as we coast from #1 in “brand new” to #1 nationwide. But that’s the trajectory we’re on. And with a nod to Newton’s first law, we’ll keep moving along that trajectory unless stopped by an external force.

Game on.

5 Key Questions for Midsize Insurers

This year, mid-sized insurers continue to face significant challenges, but these challenges can be treated as opportunities for organizations to distinguish themselves from competitors. As the digital economy continues to spur change, insurers would be wise to get in front of the curve by taking steps to improve underwriting and increase profitability. Here are five questions mid-sized insurers should ask themselves to help guide their business transformation.

1. How well do we leverage our data?

The days of the actuary as the primary data interpreter are waning as data analysts with access to an ever-increasing set of tools are leaving actuaries in their wake. Insurance companies are starting to take notice, and those that are leveraging their data to make informed decisions are enjoying faster growth and increased profitability. A data innovation strategy must come from the top of an organization and go down. However, the scope of the endeavor and the multitude of choices can be daunting. For example, a predictive model can provide great insight, but it may be more prudent to design a model that enhances your organization’s decision-making capabilities rather than one that replaces current methods. Management information, underwriting, pricing, claims management, claims reserving and actuarial reserving should all be informed by your organization’s data, which makes developing and implementing a smart data strategy imperative.

See also: A Closer Look at the Future of Insurance  

2. Is regulation an opportunity or an obstacle?

Regulation is useful when it promotes strong digital protection standards, the advantages of which are best illustrated when the inevitable cyber breach hits the press. Your organization may not be directly subject to General Data Protection Regulation or New York State Department of Financial Services (NYDFS) cybersecurity regulations, but the standards are illuminating, nevertheless. At a minimum, your firm should be reviewing compliance standards and determining which ones it should be implementing as a function of industry best practices. Since the National Association of Insurance Commissioners currently produces a less-comprehensive standard, a company may someday find itself on the defense, arguing it did only what was required. NYDFS standards could easily become the de facto standard, especially over the next few years as third-party vendors doing business with New York-based financial institutions will need to ensure compliance with NYDFS requirements. The reality is that data is an asset, and insurance companies rely heavily on data to run their businesses. Insurers will be collecting and using even more data in the future. They must take steps to protect this valuable, growing business asset and be prepared to adopt the highest standards of protection for their insureds.

3. Will our organization be the next to be disrupted?

For the past few years, venture capital dollars have been flowing into insurance disruptors such as Cyence, Metromile and Lemonade. Certainly, we won’t see complete disruption overnight, but small changes will likely occur more frequently than expected, and, over time, the effects will have a significant impact on current business models. Your company could be disrupted by a current competitor using advanced machine learning algorithms in the underwriting process. Or perhaps an insurtech startup will begin to capture all your new insurance prospects through its new mobile app and lower price point, halting your growth. Similarly, consider non-insurance-specific disruptions, such as developments in the “Internet of Things.” What if a new device is rolled out by a competitor that protects its insureds from meaningful injuries by using sensors to alert workers and their employers of dangerous conditions — providing a distinct advantage to their workers’ compensation insurance rates. Will your firm be the disruptor or the disrupted? Regardless of the answer, what is your firm doing to prepare for the impact?

4. Are we transferring risks to the capital markets?

The reinsurance market has been transformed over the past decade by insurance-linked securities (ILS), alternative reinsurance instruments like catastrophe bonds and collateralized reinsurance contracts, whose value is affected by an insured loss event. ILS investors are typically willing to accept a lower rate of return than traditional reinsurance companies because of the diversifying effect on the insurance-linked investor’s broader portfolio. That incentive has drawn more investor capital to the reinsurance market, putting pressure on reinsurance rates and even causing reinsurers to start their own investment funds. And while long-term relationships between insurers and reinsurers have tremendous value, your organization should be looking at all efficient opportunities to lay off excess risk and protect your company from earnings volatility.

See also: Can Insurance Be Made Affordable?  

5. Why do we need a digital innovation strategy?

For many, innovation is inherently uncomfortable and volatile. Technology is changing rapidly, and the insurance industry is already starting to evolve. Managing an insurance transformation process triggered by a digital revolution will not be easy, but it must begin with identifying your current value proposition: Why do your clients value your insurance? Identify what you do well as an organization and what you can improve upon. By incorporating your starting point into a change plan that recognizes current strengths and explores future possibilities, your firm will be better prepared to navigate the coming industry transformation and will be better positioned to thrive on the other side of change.

Mobile Ends Need for Usual Inspections

As I write this article, I hear the lilting melody of Alicia Keys’ tribute to New York City:

“Hail a gypsy cab, take me down from Harlem to the Brooklyn Bri-i-i-i-idge…”

Can you hear it? There are just certain things that jump to our minds when we think of New York.

I think of hot dogs, Central Park, awesome shopping, coffee shops, marquee lights on Broadway and “bouquets of sharpened pencils” (yet another New York reference for you movie buffs).

What else comes to mind? Taxis… lots and lots of yellow taxis. In the era of the sharing economy, that also means lots and lots of Uber and Lyft drivers.

But did you know that an outdated law is keeping New York consumers from taking advantage of a convenience that millions of drivers in other states already enjoy?

In New York, a law requires consumers wanting to sign up for new auto insurance coverage to first have their vehicles inspected by their insurance companies. The law was enacted in the 1970s and was designed to protect against insurance fraud.

These days, instead of preventing fraud, the law mostly produces frustration. Individuals must have their vehicles physically inspected by a licensed insurance agent or bring them to an inspection site before they can activate their auto insurance coverage.

This inspection requirement is ON TOP of the annual inspection required for all New York vehicles. So, someone who owns multiple vehicles could potentially be required to do multiple inspections throughout the year!

See also: On-Demand Workers: the Implications  

What else does this mean exactly?

Old Technology for New Times

Well, for starters, a lot of headaches, hassles and inefficiency for consumers. They frequently report:

  • Insurance coverage lapsing due to failure to complete the inspection
  • Missing work to complete the inspection
  • Long wait times at inspection sites
  • Inconvenient hours at inspection sites
  • Inspection sites with inconvenient locations
  • Students at out-of-state colleges needing to drive their cars all the way back to New York to complete the inspection OR re-register their vehicles in another state
  • Insurance companies receiving inaccurate information about inspected vehicles

That’s a lot to deal with for the average car owner, who may be balancing a full-time job, college courses and a family and has precious little time in which to get an inspection done.

But what choice do they have?

For now, none.

Mobile Innovation Changes Everything

But advances in mobile technology are radically changing the world we live in, empowering consumers to get work done conveniently and efficiently. Smartphones are at the core of this radical change.

In fact, according to recent statistics by GO-Global, not only are smartphones being used by more people than ever, but those people are spending 52% of their time on those smartphones using mobile apps.

That’s incredible!

Statistics also indicate that 18- to 24-year-olds use more mobile apps than any other age group.

See also: How to Embrace Workforce Flexibility  

It’s no wonder that the global revenue from mobile apps has risen dramatically over the last few years from $35 billion in 2014 to $58 billion in 2016, and in 2017 is expected to hit $77 billion.

Why Are Mobile Apps so Popular?

1. Mobility comes in all shapes and sizes

Almost 80% of consumers around the world have smartphones, 50%-plus have tablets, nearly 10% have wearable mobile devices and 7% own all three.

That high level of usage has had a significant effect on business practices around the world.

2. Location-Based Services (LBS)

Most devices currently have GPS capabilities that empower users to get real-time information, right here, right now.

3. Internet of Things (IoT)

Again, this advancement in technology provides users with real-time control and information, regardless of where they are.
Forgot to turn your lights off at home? No problem. Just log into your smart home app and do it from the comfort of your office.

4. Virtual and Augmented Reality (VR and AR)

This technology is revolutionizing how we interact with each other and with other software systems. Mobile app developers are expecting tremendous growth in this area.

In short, these mobile apps allow people to find the goods and services that they need quickly, easily and cost-effectively. In other words, the middlemen and gatekeepers have been all but eliminated.

Combining Mobility With Manpower

So, let’s apply those capabilities to the New York, with its outdated law that requires drivers to obtain a vehicle inspection before they can activate their insurance coverage. With today’s technology, the answer just isn’t that hard. Drivers in other states already have an alternative: smartphone-based vehicle inspection.

WeGoLook has developed mobile technology that puts a large mobile workforce at the fingertips of consumers who are too busy or simply too far away to obtain in-person inspections. Others may have their own solutions; ours looks like this:

  1. A client needs an inspection, and orders a vehicle inspection report from WeGoLook via the website or mobile app.
  2. A “Looker” is dispatched to perform the inspection. (The number of Lookers has grown from 7,400 in 2012 to more than 30,000 in 2016.)
  3. The Looker manages all aspects of the inspection from scheduling to coordinating the different parties to preparing the final report.
  4. Throughout this process, the client can monitor real-time progress on the inspection via the mobile app’s online dashboard.
  5. The WeGoLook app also has photo and text support so that clients can capture the right angles and desired information needed for the report.
  6. A management team reviews the report for quality assurance and accuracy.
  7. The client receives the detailed report, quickly and conveniently and can download it directly from the app.

Given the power behind mobile technology and flexible workers, like WeGoLook’s Lookers, there is no reason consumers should be locked into doing their inspections at traditional inspection sites.

The use of flexible mobile inspectors can solve the problem of drivers having to physically take their vehicles to an inspection site. Mobile apps like WeGoLook’s also allow for “app consistency” — that is, if a policyholder, insurance carrier and third-party inspector are all using the same platform, there is a better chance of a successful transaction. For savvier consumers, technology like WeGoLook’s app even opens the door for the consumer to self-inspect the vehicle. Certain states already allow self-inspection via smartphone for home inspections and claim inspections after an auto accident.

See also: A New Way of Thinking on Assets  

In New York, however, for the pre-insurance inspection requirement, a new law would need to be enacted to empower consumers to self-inspect their vehicles using a smartphone app. This dream scenario would give consumers the option of using a WeGoLook Looker to complete their inspection, of self-inspecting the vehicle using WeGoLook’s app or of completing the inspection via the traditional route.

WeGoLook: On-Demand Solutions That Save Time and Energy!

The beautiful thing about a mobile app service like WeGoLook is that it will offer consistent and trustworthy results regardless of who requests the report — the policyholder, a third party or the insurance carrier.

So, if you’re a busy and productive citizen of New York state, why not save yourself a heap of time and energy? Smart use of technology benefits everyone involved.

So, this spring, I urge Albany lawmakers to enact a new law that would help consumers put today’s smartphone technology to better use. Let’s give New Yorkers smartphone-based options for their pre-insurance vehicle inspections.

Lemonade: From Local to Everywhere

In a meticulously planned operation, we filed for a license in 47 states simultaneously. We’ll be revealing the first states in which Lemonade will become available in a couple of months. One thing’s for certain, 2017 is going to be an interesting ride! Stay up to date with news about our progress here

Now that I got this off my chest, I can add some color to why we’re doing this.

Many tech startups go through the famous Local vs. Global debate as they start to plan a market penetration strategy. This dilemma was born with the arrival of modern internet commerce and became even more prevalent with the emergence of SaaS companies that provide global coverage right out of the box.

When you’re selling a digital product, going global may seem like small overhead. Reality is a bit different, though, and, more often than not, small startups that take a bigger bite than they can swallow get into trouble.

When feasible, startups should consider aiming their launch beams at a single city or even a town with population that represents their typical customer.

Here’s why:

1. Know thy users, and design for them

It always amazes me how often startups overlook usability testing during the initial design phase. Having videos of random people playing with your (barely working) mockup is priceless. We learned more in a couple of days of testing than we did in months working in our office.

The cool thing is that you only need about five testers to get value out of a session like that, so there’s really no excuse to not doing it. The smaller the area you launch in, the better the chance of getting valuable data in a user testing session.

We spent hours in WeWork and Starbucks with our early stage, smoke-and-mirrors version of the Lemonade app. We would show it to people, ask for their feedback, ask them some questions and record the entire session. We would then sit in the office and analyze the videos to figure out what worked and what didn’t.

Our early Starbucks user testing sessions allowed us to launch a relatively mature product into the market and achieve faster adoption by our New York customers.

See also: Let’s Make Lemons Out of Lemonade  

2. Budget

Product launches require spending some money. To improve the chances of success, it is recommended to fuel the organic interest generated by social noise and PR efforts with some paid channels. Got a story in TechCrunch? Bloomberg? It will probably die down quicker than you think.

A nice trick is to use content recommendation tools like Outbrain and Taboola to promote content to users who may be interested in it. Google Ads are another obvious choice. Choosing the right outlets is one thing, but there’s a huge difference in costs between a global campaign and a local one.

This becomes much more dramatic when your company requires additional resources to operate in each region like Groupon and Uber. Lemonade recently closed its third round of financing ($60 million in one year of operation) from top VCs such as Google Ventures, General Catalyst, Thrive, Sequoia, Aleph and XL Innovate. We’re going to use this money to drive our expansion throughout the country and activate specific markets the way we did in New York.

3. Surgical use of media coverage

Getting great media coverage takes a lot of attention and time. Whether you can afford an agency or not, you’ll have to choose your battles well. Launching in a specific city allows you to focus on the outlets that are most relevant and will simplify your pitch to journalists.

If you’re creating something exclusive for a certain region, reporters who cover that region usually have a hunger for tech stuff that is happening, or launching in their hometown before everywhere else. BTW, there’s a case for launching in unexpected places like Portland or Philadelphia, which usually don’t get much attention from the tech and consumer industry for new products. There’s a good chance that media reach (which expands far beyond just the place you’re starting from) will be much stronger.

We chose New York for Lemonade’s home. We see NY’ers as an ideal representation of our target demographic and personality. So we invested our efforts in a select few outlets that are read by our first wave of early adopters of the city’s financial workers and young professionals — NY Post, Bloomberg and Wall Street Journal.

4 . Brand and messaging

Building a great brand involves a lot of consumer psychology. You spend weeks trying to figure out the best tagline, the perfect ad and the right illustrator to do your art. If you get this right, you have a real chance at grabbing your customers’ attention.

The first few months of brand activation are critical. Limiting yourself to a select region or demographic allows you to be laser-focused on framing and positioning.

Lemonade Local

Building an insurance company from scratch, in New York, one of the toughest regulatory environments in the country, is a huge undertaking. The sheer complexity and investment required to get to the starting point includes raising a lot of capital and hiring the right people to be able to get licensed by the state’s Department of Financial Services.

This is the life of a company that operates in a highly regulated industry, and it’s unlike anything I’ve ever seen in the tech space. For Daniel and me, the decision to start in one state was simple. There’s no other way. Insurance carriers have to choose a state. Just one. And then maybe, if you play nice, regulators will let you go for more.

We wanted to launch Lemonade in one state — NY, and even more so when we realized we had no choice 🙂

See also: Lemonade: A Whole New Paradigm  

In the last three months since our New York launch, we’ve had overwhelming demand coming in from all over the country to open up for business in more states. This was very encouraging because it showed us hints of initial demand and product market fit to people and age groups that we never thought would be our early adopters.

But what surprised us most was the excitement coming from unexpected places, such as government offices and regulators. Having a favorable regulatory environment is a great opportunity to bring an honest, affordable, transparent and fun insurance experience to everyone in the U.S.!

Be the first to know how we’re making progress with our nationwide expansion.

Here’s the list of states where we will gradually launch in the coming year or so:

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, West Virginia, Wisconsin

* States in bold represent the ones most requests to launch came from

This article originally appeared here, and you can find more about Lemonade here.

Cyber Rules May Be Only Weeks Away

Last September, New York’s Department of Financial Services (DFS) took a major step forward in its efforts to improve the cybersecurity posture of financial institutions (including banks and insurance companies) by proposing the first-in-country cybersecurity regulations.  By any measure, the proposed regulations are comprehensive and demanding, and admittedly are intended by DFS to be “groundbreaking.”  The proposal contains a number of prescriptive requirements that are substantially more rigorous than current best practices and would require major operational changes for many organizations.

Key Components  

The regulations would require entities to fulfill a variety of requirements, including the establishment of a cybersecurity program, and the adoption of a cybersecurity policy, which must be approved by the board or by a senior officer, and which encompasses key risk areas including information security, access controls, business continuity, data privacy, vendor management and incident response.

See also: If the Regulations Don’t Fit, You Must…  

The proposal would also require covered entities to designate a chief information security officer (CISO), who will be responsible for implementing, overseeing and enforcing the cybersecurity program and policy. The CISO would need to develop a report, at least bi-annually, that addresses a prescribed list of issues. The report would then be presented directly to the company’s board. The board chair or a senior office would be required to submit an annual certification of compliance with the regulations, which might expose the individual to liability if the entity is, in fact, noncompliant.

In addition, the proposed regulations broadly define a “cybersecurity event” as “any act or attempt, successful or unsuccessful, to gain unauthorized access to, disrupt or misuse an information system or information stored on such information system.” The covered entity would be required to notify the superintendent of financial services within 72 hours of any such event if it “has the reasonable likelihood of materially affecting the normal operation of the covered entity or that affects nonpublic information.” This raises the question of how an unsuccessful attack could ever have a reasonable likelihood of materially affecting operations or protected information. But a fair reading of the reporting mandate in light of the definition would not appear to allow for blanket disregard of failed attacks, even though major financial institutions thwart countless potentially devastating attacks on a daily basis. If this proposed requirement becomes part of the final regulation, the burden on covered entities and the DFS itself may be quite substantial.

Covered entities also would need to encrypt nonpublic information in transit and at rest. Although compensating controls approved by the CISO can be used if encryption is not currently feasible, the regulations would impose deadlines of January 2018 and January 2022 for encryption of data in transit and at rest, respectively. Encryption of at-rest data is likely to be one of the most challenging DFS requirements.

The proposed regulations contain many additional requirements, including:

  • Implement a fully documented incident response plan;
  • Maintain audit logs on system changes for six years;
  • Annually review and approve all policies and procedures:
  • Dispose of, in a timely manner, sensitive information that is not needed to provide services;
  • Use multi-factor authentication for privileged access to database servers that allow access to nonpublic information;
  • Adopt policies, procedures and controls to monitor authorized users and detect unauthorized access; and
  • Institute mandatory cybersecurity awareness training for all personnel.

See also: Huge Cyber Blind Spot for Many Firms

DFS is currently reviewing comments received from the public, but it is not known if the proposed requirements will change in any material way when they go into effect on the anticipated date of Jan. 1, 2017. Covered entities would then have only 180 days to comply with many requirements.

Concluding Thoughts 

Although large financial institutions may already have implemented a number of the mandates proposed by DFS, compliance still may be problematic for them because of the prescriptive nature of many of the components of the proposed regulations. And less mature entities would be well served to immediately focus on getting into compliance with the most basic requirements, given their virtually inevitable inclusion in the final regulations and the short deadline for compliance.