Will LMND report car insurance loss ratio below 70% for two consecutive quarters by Q2 2026?

The trajectory from 76% Q3 2025 needs another ~7pp to reach sub-70%. Historical improvement has been lumpy: 12pp (Q2-Q3 2024), ~1pp (Q3-Q4 2024), ~1pp (Q4 2024-Q1 2025), 6pp (Q2-Q3 2025). Deceleration is a real concern as easy repricing gains are captured. Telematics (Tesla API, day-zero experiments) represents a step-function data quality improvement, but even if Q4 2025 hits 69%, Q1 2026 needs to also be below 70%, and Q1 is historically worse for auto due to winter driving conditions. The consecutive requirement makes this significantly harder than hitting sub-70% once.

The math is demanding. From 76% in Q3 2025, achieving sub-70% in Q4 2025 requires >6pp improvement in a single quarter -- possible but at the upper end of the observed range. The most likely path to resolution is Q1+Q2 2026 both below 70%, but this requires sustained improvement through a period when state expansion may temporarily worsen loss ratios. The industry auto combined ratios also improved during this period (per Black Swan Beacon), suggesting some of the 19pp improvement reflects favorable conditions rather than purely AI-driven gains. Insider selling of $23.4M with zero purchases does not suggest management expects near-term operational breakthrough.

The earliest achievable window is Q4 2025 + Q1 2026. Optimistic 4pp/quarter improvement from 76% gets to ~72% by Q4, ~68% by Q1 -- only one quarter below 70%. For two consecutive, the path requires Q1+Q2 2026 both below 70%, meaning the loss ratio must breach 70% by Q1 2026 and sustain through Q2. Telematics integration (Tesla API, 60%+ conversion improvement) and cross-sell dynamics (50% of new car sales from existing customers) provide genuine upside momentum. The 700K+ waitlist in 10 states covering 50% of US market suggests demand is not the constraint -- underwriting quality is. If the telematics data is genuinely improving risk selection, the rate of loss ratio improvement could accelerate rather than decelerate.

The improvement trajectory is impressive (19pp in 5 quarters from 95% to 76%) but the resolution bar is demanding -- TWO consecutive quarters below 70%, not just one. From 76%, getting below 70% requires continued ~4pp/quarter improvement, which has only been achieved in some quarters. The lumpy pattern (big drop, plateau, big drop) suggests improvement comes in waves from specific pricing/underwriting actions rather than steady progress. If Q4 2025 lands around 71-73% (reasonable base case given the typical 4pp improvement), the entire burden shifts to Q1+Q2 2026, and winter driving in Q1 typically worsens auto loss ratios.

The 70% threshold is specific and has not been achieved yet. The committee identified ~65-70% as needed for viable unit economics, and the trajectory is heading that direction but has not crossed it. Easy repricing gains from the 95% era are exhausted. Day-zero telematics is promising but experimental -- 60% conversion improvement does not directly translate to loss ratio improvement. Two consecutive quarters adds significant difficulty since one bad quarter resets the clock. State expansion to new geographies is an active risk that could cause a temporary reversion above 70% even if the overall trend continues downward.

The probability is low given the demanding resolution criteria. The question requires sub-70% for 2 consecutive quarters within a 3-quarter window (Q4 2025 through Q2 2026). Current rate is 76%. The improvement trajectory has been real but inconsistent quarter-to-quarter. Q1 auto loss ratios are typically worse due to winter conditions. The insider selling pattern ($23.4M sold, $0 purchased) does not suggest management expects near-term operational breakthrough on car profitability. The most generous reading gives ~30-35% chance of hitting sub-70% in any single quarter by Q2 2026, and requiring two consecutive makes it multiplicatively harder.

Car loss ratio at 76% in Q3 2025, needs to drop below 70% for two consecutive quarters by Q2 2026. Rate of improvement has been ~4-6pp per quarter but is decelerating as easy gains are captured. Getting sub-70% once is feasible within the timeframe; sustaining it for two consecutive quarters is significantly harder. Telematics and cross-sell dynamics provide upside but are unproven at the loss ratio level.

The improvement from 95% to 76% is impressive but the last 6+pp to sub-70% is likely harder to achieve. Sub-70% threshold has never been reached. Industry cycle may be turning, and some improvement may reflect favorable conditions rather than purely AI-driven gains (per Black Swan Beacon). Winter seasonality works against Q1 auto performance. Two consecutive quarters is demanding.

76% current loss ratio needs to drop below 70% twice consecutively. The ~6pp gap requires continued aggressive improvement over 2-3 quarters. Improvement has been lumpy rather than steady, making consecutive achievement uncertain. Telematics and rate actions provide upside potential but state expansion creates downside risk. The tight 3-quarter window (Q4 2025-Q2 2026) limits margin for error.