Lemonade Insurance and its subsidiary, Lemonade Insurance Company (LIC), have recently secured important reinsurance contracts that will protect their business operations. These contracts, including property per risk excess of loss reinsurance (PPR) and automatic facultative property per risk excess of loss reinsurance agreements, will be effective from July 1, 2023, until June 30, 2024.
Under the PPR contract, Lemonade Insurance and LIC will cede 100% of claims exceeding $750,000, up to a maximum recovery amount of $2.25 million. This arrangement comes with certain limitations to ensure a fair and balanced agreement.
In addition to the PPR contract, LIC has also agreed to an automatic facultative property per risk excess of loss reinsurance contract with Arch Re. Similar to the PPR contract, claims surpassing $3 million will be fully ceded, with a potential recovery of at least $10 million. This contract is also subject to specific limitations.
The reinsurance program, which encompasses all of Lemonade’s products and geographic territories, has been successfully renewed, starting on July 1, 2023. The program includes whole account quota share reinsurance contracts involving Lemonade, LIC, Metromile Insurance Company (MIC), Hannover, MAPFRE, and Swiss Re.
Lemonade explained that their reinsurance program allows them to transfer a portion of premium to reinsurers, known as reinsurance cede. In return, reinsurers provide a ceding commission on the premiums ceded, as well as funding for corresponding claims, with certain limitations taken into consideration. The proportional reinsurance share in the program is approximately 55% of the premium, with a per-risk cap of $750,000. The contracts also feature loss ratio caps and variable commission levels to align the interests of Lemonade and its reinsurers.
Maintaining journalistic integrity, it is essential to offer a balanced perspective on this news. While Lemonade’s successful securing of reinsurance contracts is undoubtedly positive for its business, it is crucial to consider potential implications and any concerns related to these arrangements. Further expert opinions and market analysis will provide comprehensive coverage of this important development.
In conclusion, Lemonade and LIC have taken significant steps by securing the PPR and automatic facultative PPR reinsurance contracts to safeguard their business operations. As part of the reinsurance program, these contracts will enable Lemonade to manage its risk effectively while maintaining strong partnerships with reinsurers. This news signifies Lemonade’s commitment to the insurance industry’s stability and its desire to protect its customers’ interests.
