Annual reports tend to be boring documents full of numbers. But if you compare the results and the time series shown in them between different companies, there is no shortage of surprises. How would the battle between the two most interesting insurtech insurance companies from different continents turn out?
Pillows and lemonades in the insurance
Pillow insurance company appeared on the Czech market at the end of 2019 and offered insurance to clients in 2020. American Lemonade, Inc. started its operations at the end of 2016, i.e. three years earlier. 2017 was the first full year that insurance was offered. “Both insurance companies focus on the offer of retail insurance, they rely on the revolutionary digitization of all processes and maximum transparency of insurance conditions towards their clients,” explains Martin Podávka, co-founder of Pillow and product expert. And he adds: “The difference between both companies from traditional insurance companies lies in the so-called profit share. Its calculation is different, but the principle is the same. In the event of a good claims development, the insurance company undertakes to share a portion of the profit with clients (at Pillow) or to send it to charity (at Lemonade).”
While Lemonade’s first product was property insurance, Pillow’s car insurance and home insurance only came on the market in its third year of operation. Lemonade offered car insurance as a result of the acquisition of insurance company Metromile. Both Lemonade and Pillow offer revolutionary mileage-based motor third-party liability (MTPL) insurance and collision insurance. Here, however, the difference in the offer is already visible: while Lemonade requires the installation of a special device in the technical port of the vehicle, Pillow found an innovative solution without the need for any additional box in the car, thereby significantly reducing insurance costs.
The duel of the insurance companies: the numbers speak clearly
Lemonade’s comparable accounting history already includes 7 years (2017-2023), while Pillow’s is 4 years (2020-2023). Marcel Beno, co-founder of Pillow and process architect, explains, “The two main performance parameters of any insurance company are the written premium (GWP), i.e. how much money clients send to the insurance company each year, and the profit and loss. A successful insurance company gets new and new clients, and therefore the premiums collected grow each year. At the beginning of the business, every company is in loss and tries to get to profit as soon as possible by managing costs effectively.”
| Accounting values | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
| Lemonade GWP (mil. $) | 9 | 47 | 116 | 214 | 376 | 556 | 738 |
| Pillow GWP (mil. CZK) | – | – | – | 94 | 316 | 618 | 835 |
| Lemonade profit/loss (mil. $) | -28 | -53 | -109 | -122 | -241 | -298 | -237 |
| Pillow profit/loss (mil. CZK) | – | – | – | -21 | -42 | -22 | 3 |
| Recalculated values * | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
| Lemonade recalculated GWP | 0,5 | 2,3 | 5,4 | 10,0 | 15,9 | 21,6 | 27,0 |
| Pillow recalculated GWP | – | – | – | 14,5 | 45,1 | 88,3 | 101,7 |
| Lemonade recalculated profit | -1,4 | -2,6 | -5,1 | -5,7 | -10,2 | -11,6 | -8,7 |
| Pillow recalculated profit | – | – | – | -3,3 | -6,0 | -3,2 | 0,3 |
* The recalculated values take into account the different GDP of each country, calculated as (GWP or profit) / GDP*10^6. CZK/USD exchange rate used: Czech National Bank at the end of the year. Source of GDP in each year: International Monetary Fund, www.imf.org
In 2023, both insurers (as in previous years) recorded a significant inflow of clients. Money collected from clients increased by 33% for Lemonade and 35% for Pillow compared to the previous year (according to the insurers’ income statements). Thus, the contest is evenly matched on this parameter and both insurers are among the absolute best performers in their respective markets. The difference, however, is in the bottom line.
While Lemonade company has not made a profit even after 7 years of business, Pillow company has done the impossible in its fourth year on the market: ending the financial year in the black. Jakub Strnad, founder and CEO of Pillow Insurance Company, comments on this achievement. “Most companies focus on growth and cover realized losses with investor money. Pillow’s strategies and principles have shown that fair insurance can exist for clients in the long term and sustainably. This is great news for all clients and Pillow shareholders at the same time.”