Artificial intelligence-powered insurer Lemonade recorded a net loss of $67.2 million for the second quarter compared with a net loss of $67.9 million a year ago during the same period.
Catastrophes, specifically severe convective storms, weighed on the quarter’s results for the New York-based insurtech. The gross loss ratio at Lemonade increased 8 points year-over-year to 94%.
Net written premium for Q2 was $87.2 million, up from $38.2 million a year ago. In-force premium increased by 50% to $686.6 million as compared to the second quarter last year, and Lemonade’s customer count increased 21% to about 1.9 million.
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In a letter to shareholders, Lemonade said that, excluding catastrophes, loss ratios are improving. Without the weather-related losses in homeowners, the loss ratio was in the 60s for the first time, the insurer said.
The insurer said it is reviewing its homeowners book of business and its model suggests “a portion of our book should not be renewed.” About 2,000 homeowners policies have been non-renewed, Lemonade said.
“We’re encouraged by these underlying improvements, and believe it is a solid signal that our ongoing loss ratio efforts, including improved underwriting and consistent rate filings, will continue to bear fruit,” Lemonade said in the letter, adding that its “rate-filing pace remains high.” For instance, California regulators recently approved rate increases of 30% for homeowners and 23% for pet insurance.
“Currently, only roughly half of our newer rates have ‘earned in’, which means we’ll see the full impact of these rate changes in the coming quarters,” Lemonade said. “More rate changes are needed and are being sought, and things are moving in the right direction. The moderating rate of inflation, coupled with a quickening pace of filings and approvals, bodes well – though all these will take several quarters to fully register on our book.”
Topics Profit Loss Homeowners
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