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Metromile will not operate as a distinct business after Lemonade deal: Schreiber

Daniel Schreiber lemonade in back tech crunch.jpg
Noam Galai/Getty Images for TechCrunch

Lemonade will not run Metromile as a distinct business after it’s $500mn acquisition of the auto carrier, according to CEO Daniel Schreiber who described how the deal will enable the InsurTech to operate “at the vanguard of car insurance”.

Speaking on a call with analysts this morning, the Lemonade CEO emphasized how the deal announced yesterday will help the firm “leapfrog” in terms of its data and technology capabilities, while also emphasizing that going forward, Lemonade will be able to price its auto product with more precision.

When asked on the call how he would run Metromile differently after the acquisition, Schreiber said: “We don't intend to run Metromile distinctly at all, we intend to run a single company with a single (auto) product. Over time, once the combination is complete, there will be a successor to our Lemonade car (product) that was launched last week.

“This isn’t about changing or fixing or transforming Metromile. It’s about strengthening Lemonade car and operating at the vanguard of car insurance.”

He explained that one of the ways in which the deal will pay dividends and unlock value for shareholders is “by collapsing time”.

“We are acquiring billions of miles of highly textured driving data and advanced telematics technology, along with peak pricing and underwriting knowledge,” he added.

Schreiber said Metromile has implemented proprietary machine-learning models that are informed by real world feedback and iteration at scale.

“It would candidly take us years to gather this level of insight,” he explained.

The data insights and other capabilities from Metromile that Lemonade plans to inject into its own operations will enable Lemonade to “pass on those savings in a way that creates a sustainable industry structural advantage relative to incumbents,” he said on the call.

Data streams, not proxies

During the call, Schreiber explained that Metromile’s data capabilities will help Lemonade to focus on “precision pricing”, not proxy-based pricing.

He added: “One of the fundamental drivers of how Lemonade thinks about contracts and how Metromile thinks about (car insurance) contracts, is to increase the underweighting of proxies.”

The chief listed credit score, gender, marital status and job history as all the things that incumbents rely on almost exclusively in pricing in underwriting.

Instead, Metromile uses continuous data streams, which give precise information about how much a car has driven, and how well it has been driven.

“What Metromile has spent the better part of a decade doing is getting pinpoint data on every mile driven and the risks associated with all the elements of the driving. That then allows you to predict losses per mile driven, at a level of granularity and precision that proxies can never get.”

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