Lemonade Inc. is cutting its reinsurance cession again, though by a much smaller margin than last year. The company said its quota share cession will fall to approximately 18% of premium from about 20% under a program renewed effective July 1, 2026.
The renewed program runs for a standard 12-month term. Its July 1 start places it alongside a broader wave of mid-year reinsurance renewals across the industry.
A lower cession rate means an insurer keeps a larger share of both the premium it collects and the underlying risk. Lemonade attributed the change to its growing premium base.
This year's reduction is modest next to last year's. Lemonade cut its cession from roughly 55% to 20% in its July 2025 renewal, a far larger step. At the time, the company's president, Shai Wininger, attributed the reduction to steady improvements in its technology-driven underwriting.
The cession rate has moved further still over a longer stretch. Lemonade's quota share arrangement stood at around 75% earlier in the company's history, when its reinsurance panel included Munich Re, Swiss Re, and Hannover Re. Each cut since then has shifted a larger share of both premium and risk back onto Lemonade's own balance sheet.
The renewed program also increases coverage for higher-volatility and catastrophe-exposed risks. It adds tail catastrophe protection for the highest layers of a catastrophe program. Those layers are least likely to be triggered but carry the largest potential payouts.
Tim Bixby, Lemonade's chief financial officer, said the renewal affects the company's reinsurance costs, coverage, and capital efficiency at the same time. "We are retaining more premium, adding protection against the volatility that matters most," Bixby said.
Lemonade's most recent quarterly results give some indication of how the 2025 transition has played out. The company said the reinsurance change, completed in the third quarter of 2025, contributed to a 71% jump in first-quarter 2026 revenue, to US$258 million. Net loss for the quarter narrowed 43% to US$35.8 million.
Lemonade also plans to adjust its ancillary reinsurance arrangements. Its Property Per Risk coverage will expire, while its European catastrophe excess-of-loss program will expand.
Lemonade was not alone in adjusting its risk retention around the same period last year. Allstate expanded its national catastrophe bond capacity to US$9.5 billion. Travelers raised its catastrophe excess-of-loss retention to US$4 billion and relied entirely on private reinsurers for that layer.
The pattern suggests insurers broadly were retaining more risk internally last year rather than reacting to Lemonade-specific factors alone.
