Agencies
Comparion Insurance Agency is now appointed with Lemonade as of September 30, 2024. If you know the history between Liberty Mutual (Comparion’s parent company) and Lemonade, this might come as a surprise. But in business, moves are either rational or irrational, and this one is the former.
Some History
Back in September 2016, Lemonade launched with the tagline, “Instant everything. Killer prices. Big heart.” making its debut by targeting Buffett’s margin. They’ve since tweaked the tagline to “Instant everything. Incredible prices. Big heart.”
Towards the end of 2016, after 5 years at Liberty Mutual, John Peters made the jump to Lemonade. In his post titled Trading the corner office for a desk at Lemonade and published on Oct 10, 2016, Peters made it clear he was ditching the status quo: “When you do anything for 23 years, you tend to fall into a rhythm.” He left behind inertia and incremental change for what he described as transformational change – “But I believe a revolution is coming, and I want to lead it; to be part of the change.” Needless to say, Liberty Mutual wasn’t exactly thrilled with this post. But that was the old Liberty, under the former CEO David Long. Peters, who was Liberty’s Executive Vice President of Commercial Insurance Operations, managed a division with nearly $10 billion in premiums, 2,500 staff, and a $300 million operating budget, with $100 million in IT spending, according to his LinkedIn profile. Now, he’s Lemonade’s Chief Insurance Officer, running what he describes as an “innovative, fast-growing, and profitable insurance company.” However, Lemonade is net cash flow positive but still not profitable.
In Aug 2017, the old Liberty launched Lulo, a direct-to-consumer Lemonade clone. By Oct 4 2017, it was no longer signing new customers.
Comparion Insurance Agency, launched at the end of 2021, transitioned 2,200 exclusive agents to offer more than just Liberty Mutual products. According to Reddit, Comparion provides a solid entry point into an insurance career with a base salary starting at $55K during training, dropping to $35K after two months, and commissions ranging from 8-15% for new business and 1-4% for renewals. To join the agency, one needs sales experience, a high school diploma, good communication and organizational skills, and either an insurance license or a willingness to get one. As for the broking channel, while it’s often said to be immune to disruption, this is because brokers essentially work for free until they close a deal—so there’s no reason for gloating. “Let’s be honest, it’s sales.”
Today, the agencies of GEICO, Liberty Mutual, and Travelers are all appointed with Lemonade. This isn’t a revolution—it’s a revelation. The other revelation? Lemonade isn’t as much of a risk-taker as it could have been.
Risk Averted
This summer, we reported that Lemonade partnered with Homesite to offer home insurance in Kansas, Kentucky, Minnesota, North Carolina, New Mexico, and Utah, while continuing to carry the risk in Arizona, Colorado, Connecticut, DC, Georgia, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New York, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Virginia, and Wisconsin.
However, you can now scratch Arizona and Oregon. In a recent filing for Oregon, Lemonade announced it will pause writing new HO3 (single-family home) policies through its direct channel, effective October 1, 2024. The same applies to Arizona, with both states now having Homesite as the policy underwriter. Lemonade once symbolized the rise of D2C AI, with its agency serving as more of a legal formality. The messaging was simple: “Instead of profiting from unclaimed premiums, we take a flat fee out of your premium as our profit, and donate whatever money may be left, after paying claims and expenses, to charities (this is called the Lemonade Giveback).”
Now, the disclaimers have become more complex—and for good reason. Most homeowners insurers have lost money over the past decade, and the number of losing insurers is increasing, according to Aon. The largest personal lines insurance product by premium volume is personal automobile insurance, which totaled nearly $300 billion in industry premiums between liability and physical damage coverages. That dwarfs the $128 billion of 2023 homeowners premiums written. The old strategy of “sell the home to get the auto” may have worked in the past, but it no longer holds true.
Both Pinpoint Predictive and Lemonade raised their first seed rounds in 2015, alongside companies like Oscar, Trov, Insureon, CoverHound, and Metromile, which were among the top insurtech fundraisers at the time. However, Pinpoint Predictive, which recently announced its Series A round, represents the growing influence of B2B AI. Today, Pinpoint Predictive shares the stage with companies like Coterie, Vouch, Honeycomb, and Gradient AI—this year’s top insurtech fundraisers—firms that are more closely aligned with agents than their predecessors. One trend isn’t replacing the other, but AI in the hands of insurance professionals presents less risk than AI in the hands of insurance consumers.