[daschreiber]

Daniel from Lemonade here. Totally understand how P2P can be confusing as a term. What we mean by it is that we use each group's premiums to pay their claims, with leftover money going back to the group's common cause. To us P2P is a shorthand for: 'it's not our money'!

[propter_hoc]

> What we mean by it is that we use each group's premiums to pay their claims, with leftover money going back to the group's common cause.

So using pension plans as an analogy, it's more like a pay as you go pension scheme, like Social Security, than a fully funded scheme where the capital is invested and the returns from investment pay expected payouts.

I guess the distinction is that since the leftover money is used to donate to causes, there's no buffer to handle any unusual payments in the scheme itself, and the scheme is insolvent immediately in any month where claims exceed payments. So any buffer has to come from the reinsurance contract, or from any equity capital invested in the entity writing the insurance contracts.

Is this accurate? Really interested if you tell me a little more about how you handle risk here.

[edc117]

Don't usually do this, but seconding this response because I'd really like to emphasize it and I'd love to hear some of these answers. Why not just return the extra as lower rates in the subsequent month or refunds instead of donating?

[KaiserPro]

Daniel: Its really not P2P though is it?

What you're doing is charging a flat fee to enter into a policy which is underwritten by someone else. its not sharing, its not anything special, its just insurance with a fancy GUI.