I grabbed that quote from the web site. With State Farm if there is money left over they give it back. While donating to causes is great, since you want to avoid doing that it just looks like marketing.
We've really bad fires in CA in the last few years. I think claims were in the $12B range from the 2018 fires. What happens to Lemonade when there is a mass causality like this and many insured make claims at the same time?
The wikipedia page on the subject is pretty interesting: https://en.wikipedia.org/wiki/Reinsurance
https://en.wikipedia.org/wiki/International_Society_of_Catas...
Originally the "Society for Equitable Assurances on Lives and Survivorships", but obviously that wasn't hip enough to survive past the 19th century.
https://en.wikipedia.org/wiki/The_Equitable_Life_Assurance_S...
Natural disasters don't work that way. Insurance companies might go 10 years without a major claim, then suddenly there's a major disaster and 10% of their customers have claims that far exceed the value collected by the policies over several terms.