Lemonade Insurance and Lemonade Insurance Company (LIC) have secured property per risk excess of loss reinsurance (PPR contract) to protect its business, effective from July 1, 2023 until June 30, 2024.
Under the PPR Contract, claims in excess of $750,000 are 100% ceded up to a maximum recovery of $2.25 million, subject to certain limitations.
Additionally, the insurtech also announced that LIC has agreed to the terms of an automatic facultative property per risk excess of loss reinsurance contract with Arch Re; also effective from July 1, 2023 until June 30, 2024.
Under the Automatic Facultative PPR Contract, claims in excess of $3 million are 100% ceded with a potential recovery of at least $10 million, subject to certain limitations.
As of June 21, 2023, Lemonade, Inc., together with certain of its wholly-owned subsidiaries, completed the renewal of its reinsurance program, effective on July 1, 2023.
The reinsurance program includes whole account quota share reinsurance contracts by and among the company, LIC, Metromile Insurance Company (MIC) as well as Lemonade Insurance, and each of Hannover, MAPFRE, and Swiss Re.
The contracts underlying the reinsurance program as well as the PPR contract and the Automatic Facultative PPR Contract contain standard customary representations, warranties and covenants, and will continue in effect unless terminated by any party pursuant to its terms, Lemonade noted.
“Under the reinsurance program, which spans all products and geographies, the company transfers, or “cedes,” a share of premium to the reinsurers. In exchange, these reinsurers pay the company a ceding commission on all premiums ceded to the reinsurers, in addition to funding the corresponding claims, subject to certain limitations,” the insurtech explained.
Adding: “The overall share of proportional reinsurance under the Reinsurance Program is approximately 55% of premium. The Per Risk Cap across the contracts is $750,000. Additionally, the contracts are subject to loss ratio caps and variable commission levels, which align the Company’s interests with those of its Reinsurers.”
