Lemonade cuts quota share reinsurance cession rate to 20% from 55%

By Michael Loney

June 30 - (The Insurer) - New York-listed insurtech Lemonade has reduced the ceded proportion of its quota share reinsurance from approximately 55% to around 20%, effective July 1.

Lemonade said the reduction to the program, which will be in effect for a standard 12-month term, was made “given strong progress in the company’s diversification, underwriting prowess and loss ratio trajectory.”

It said that the variable ceding commission rate related to the quota share agreements is expected to be roughly equivalent to that of the expiring agreements.

The program covers all Lemonade businesses globally, and the primary quota share carriers remain unchanged.

“This year, we continued to reduce our reinsurance overhead, which is a reflection of how much stronger and more precise our tech based underwriting and pricing machines have become,” said Shai Wininger, president and co-founder of Lemonade.

He added: “Reinsurance comes at a cost, and thanks to years of steady improvements, we’re now in a position to retain more of the risk ourselves, improve margins, and stay capital-light — all while continuing to work with some of the world’s top reinsurers.”

Lemonade expects to renew its other ancillary reinsurance programs, including property per risk coverage, at terms roughly in line with expiring agreements.

In its 10-Q for the 2024 year filed in February this year Lemonade said that it had renewed its proportional reinsurance contracts effective from July 1, 2024, to June 30, 2025, with similar terms to the contracts that expired on June 30, 2024.

The filing said the reinsurers for the program were Hannover Ruck SE, Mapfre Re and Swiss Reinsurance America Corporation.