Lemonade, Inc. (NYSE: LMND), the digital insurance company, has announced the renewal of its global reinsurance program, effective July 1. The company plans to significantly reduce the ceded proportion of its quota share reinsurance from approximately 55% to approximately 20%.

This strategic adjustment reflects Lemonade’s advancements in diversification, underwriting capabilities, and a favorable loss ratio trajectory. The variable ceding commission rate associated with the quota share agreements is expected to remain comparable to the expiring terms. The program will continue to cover all of Lemonade’s operations worldwide, with primary quota share carriers remaining unchanged.

Shai Wininger, President and cofounder of Lemonade, commented on the decision, stating that the reduction in reinsurance overhead is a direct result of the enhanced precision of their tech-based underwriting and pricing systems. He highlighted that this move allows Lemonade to retain more risk, improve profit margins, and maintain a capital-light structure, while continuing to collaborate with leading global reinsurers.

The company also expects to renew its ancillary reinsurance programs, including Property Per Risk (PPR) coverage, under terms similar to the current agreements. The renewed program is set for a standard 12-month term.

Lemonade offers a range of insurance products, including renters, homeowners, car, pet, and life insurance. Operating as full-stack insurance carriers in the US and the EU, the company leverages artificial intelligence and machine learning to streamline operations, aiming to minimize paperwork and provide instant services. Lemonade is a Certified B-Corp, committed to social impact through its annual Giveback initiative, where unused premiums are donated to nonprofits selected by its community. The company currently operates in the United States, Germany, the Netherlands, France, and the UK.