Peer-to-peer insurance startup Lemonade is open for business in New
York, nine months after the startup’s debut and initial venture funding
announcement.
The New York-based company, which its founders promise will reinvent
the insurance business model and make insurance a “delightful”
experience for consumers, is now selling homeowners policies in the
Empire State beginning at $35 per month, and renters coverage that
starts at $5 per month.
Lemonade says users can buy the coverages instantly, from any mobile
device, quickening a process that otherwise may take days or weeks.
New York is the first state in which Lemonade is approved to conduct
business. While the firm plans to expand, when that may happen remains
unclear. A spokesperson responding via email noted an “expansive vision”
that will include “expanding both geographically and in terms of lines
of business in due course.”
Lemonade attracted $13 million in seed funding from outfits including
California’s Sequoia Capital and Aleph, a venture capital firm that
typically partners with Israeli entrepreneurs.
Entrepreneurs Daniel Schreiber and Shai Wininger (also company
president) co-founded Lemonade. They’ve attracted veteran insurance
executives from AIG and ACE for Lemonade’s executive team. Among them:
Lemonade Chief Insurance Officer Ty Sagalow, a veteran executive from
American International Group.
Everest Re, Hiscox, Lloyd’s of London, XL Catlin and Berkshire
Hathaway’s National Indemnity are among Lemonade’s global reinsurance
partners.
Lemonade bills itself as a game-changing high-tech P2P insurance
carrier that will upend how insurance is sold and make the process of
buying it much nicer and easier for consumers. Its founders believe the
current insurance system is “antagonistic” and “annoying” — as its own
behavioral scientist claims in a promotional video.
The name for the company captures the idea of turning what the
founders believe consumers feel is a “lemon” of an experience into
“lemonade.”
“Most Americans view insurance as a necessary evil rather than a
social good, and that’s something we’d like to change,” Schreiber said
in the capital raising announcement.
The founders contend that traditional insurers place growth ahead of
customers’ interests whereas the affinity or peer-to-peer model places
customers first and promises to reduce fraud and other operating costs
as a result.
“The downward spiral is easy to chart but hard to reverse: growth
quashes affinity, alienation fosters fraud, and heavy-handed claims
adjusters replace trust. Before you know it, premiums go up, while
getting paid becomes a nightmare. In this industry, the pursuit of
growth is a race to the bottom,” Schreiber writes on the company’s web
site.
A P2P insurer invites users to form small groups of policyholders who
pay premiums into a pool to pay claims, but members get any leftover
funds at the end of the policy period. Lemonade says it will donate any
leftover funds, or underwriting profit, each year on customers’ behalf
to a cause of their choice.
Lemonade Inc. is a public benefit corporation that promises that social impact is part of its business model.
“Instead of making our money from denying claims, as is the norm
within the industry, we treat your premiums as your money (shocking!),
take a flat fee for our services, and return what’s left to a cause of
your choosing,” the company’s blog tells its customers.
Lemonade is not the only P2P insurance venture. Germany has
friendsurance (founded in 2010), the United Kingdom has Guevara, and
China has TongJuBao.
Credit: http://www.mynewmarkets.com
Home / Uncategories / Lemonade’s Peer-to-Peer Insurance Model Aims for ‘Delightful’ Customer Experience
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