Lemonade

QueenBee
It’s just like the insurance industry to be up with the hipness of Beyoncé. As most of you have heard, Queen Bee just released “Lemonade”, her sixth studio album on April 23, and its originality and boldness have created quite the buzz. But preceding this pronouncement was the report a few months ago of some of the industry’s biggest players agreeing to back another “Lemonade”, the world’s first peer-to-peer (P2P) insurance company.  Berkshire Hathaway, Everest Re, Hiscox, Munich Re, Transatlantic and XL Catlin have all agreed to reinsure the start-up alongside two as yet unnamed syndicates at Lloyd’s of London.

What does either one of these things have to do with captive insurance?  Well, other than getting a chance to use Beyoncé’s picture legitimately for my blog, the P2P insurance company Lemonade might have a spill-over effect for captives. As traditional carriers get further squeezed by consolidations, non-existent returns, and now competition from this type of disruptive product, the more competitive they will become to capture (or recapture) business lost to the captive industry.

The company has been relatively secretive so far about the exact nature of its offering. But with its reinsurance partners now in place, a full consumer launch is  ready for the coming months.  They have been guarded on exactly how its offering will work–simply stating that it will harness the power of behavioral economics and the sharing economy, delivering to consumers an insurance experience that is instantaneous and un-conflicted.

The flip side of this challenge will be the potential opportunity of some of our more entrepreneurial captive folks to find a place for captives in this new model. The business will work by pooling the premiums of individuals in a similar way that a mutual or P&I club might work. And, in contrast to other peer-to-peer products that have been launched elsewhere, any policy will be guaranteed by the carrier, which will also have the ability to purchase reinsurance.  I know captives don’t get mixed up in the messy world of personal lines, but this may open doors at some level.

Either way, the world of insurance and risk management is continuing to evolve so be ready!

Thank you all very much, and I look forward to hearing from you.

Rich Smith,
VCIA President

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