Giveback is a cornerstone of our business model that, when coupled with fixed fee, works to align interests with those of our customers, which they believe builds trust, minimizes fraud, and keeps costs down.
Giveback is a cornerstone of our business model that, when coupled with fixed fee, works to align interests with those of our customers, which they believe builds trust, minimizes fraud, and keeps costs down.
If a state, federal authority or foreign jurisdiction was to find that the Giveback was a rebate rather than a charitable contribution, or impermissible on other grounds, they may not be able to donate the residual value of our customers’ premiums to nonprofits in certain, or any, of the states or foreign jurisdictions in which we operate. If even one regulator were to disallow the Giveback, it could force them to abandon the Giveback in part or entirely, either of which could undermine the behavioral economics foundation on which our business model is based, which in turn could materially and adversely affect Lemonade brand, financial condition and results of operations.
Additionally, they could modify, reduce or eliminate the Giveback at discretion for a variety of reasons. Lemonade Insurance Company’s board of directors may determine the amount and distribution of the Giveback by taking into consideration various factors such as the current goodwill and reputation of the nonprofit selected by customers, the amount of funds available for distribution by each cohort, the reasonableness of such contribution, and general shareholders’ interests, such as the proposed amount and distribution of the Giveback against factors like overall shareholder returns, financial and operating performance, and social responsibility and the benefits shareholders and their communities receive from proposed contributions.
Before determining the amount of the Giveback, Lemonade Insurance Company’s board of directors may also analyze the extent of reinsurance coverage and management’s expectations with respect to such reinsurance coverage for the upcoming fiscal year, particularly as it relates to the amount of capital and surplus required to continue to operate successfully. If after weighing any of these factors, Lemonade Insurance Company’s board of directors were to reduce or eliminate the Giveback