Skip to main content

Lemonade: Rethinking Insurance Through New Technologies

🗣 Lemonade, a for-profit Benefit Corporation, is an insurance company powered by a unique combination of artificial intelligence and blockchain to help users receive renters and homeowners’ insurance at reasonable rates. The company uses AI to create the optimal flat-fee rate for an insurance seeker, then its blockchain-based smart contracts help to lock a user into a payment agreement. Using blockchain, Lemonade can approve insurance claims and payouts within minutes, rather than days.

🗣 Lemonade reverses the traditional insurance model, treating the premiums you pay as if it’s your money, not theirs. That way, insurance becomes simple and transparent. “We take a flat fee, pay claims super-fast, and give back what’s left to a cause you care about” is how they advertise themselves.

The company is a full-stack insurance carrier built to provide the best, most delightful, and most transparent insurance experience in the world, offering hassle-free renters (contents), homeowners, car, pet, and life products in the US and Europe. It is also a fully licensed and regulated insurance company, which means they underwrite, price, and sell policies, as well as handle and pay claims.

They’re also a public benefit corporation and a certified B-Corp, which means they care about the community and environment, and not just business results. Once a year, if there are unused premiums left over, they give them back to nonprofits our customers choose.

It sounds too good to be true right? Let’s dive into how it actually works

🗣 How is Lemonade’s business model different from that of a traditional insurance carrier?

Traditional insurance companies generate profits from whatever premium is left after paying claims and expenses; that insurance business model could create conflict between the insurance company and its customers.

Lemonade was built differently.

Instead of profiting from unclaimed premiums, they take a flat fee out of your premium as their profit, and donate whatever money may be left, after paying claims and expenses, to charities (this is called the Lemonade Giveback).

This way, customers enjoy amazing insurance, and society gets a little push for the better. It also means that they’re happy to pay claims fast and with no hassle.

How is Lemonade structured?

Lemonade, Inc., a publicly traded company, is listed on the New York Stock Exchange and is a public benefit corporation organized under Delaware law. It is also the parent company for a group of subsidiary companies.

How do you get Lemonade insurance?

Lemonade policies are primarily sold online through the website or mobile apps. Customers are required to download the app in order to manage their assets, get help from the team, and file claims.

Is Lemonade reinsured?

They are! Some of the biggest reinsurers in the world are reinsuring Lemonade. Names like Swiss Re, Munich Re, and Hannover Re are just part of the list.

When can you expect Lemonade to be available in your state? Just name it!

Lemonade is already available in Alabama, Arizona, Arkansas, California, Colorado, Connecticut, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, and Wisconsin. For everyone else – They’re coming soon.

🗣 The most admired companies are reversing the trend ff business practices that have defined their industries. Through leadership guidance and company actions, they are establishing more balanced relationships in which both sides win. Customers and companies alike are better off because they are in each other’s lives. These companies achieve this balance by blending how they operate with how they embed “human-oriented technology” to maximize customer satisfaction.

Several behaviors are common among these companies that blend high tech with high touch to deliver value to customers. First, leaders are clear about how they will and will not grow. Leaders diligently take action to point out exactly what the high road is, creating a path for the company to follow.

Second, these companies choose to be transparent in explaining the “why” behind their actions, such as pricing or how and why they build products the way that they do. By sharing information about their products and pricing, and by openly transferring knowledge to customers, these organizations prove they want to do what’s best for customers.

Third, these companies use the most modern and innovative technology to enable radical transparency. Some are using blockchain to show you every step in your food’s supply chain, from farm to store. Others use artificial intelligence and machine learning to create more transparent interactions with customers. The key, no matter which technology path is taken, is that its development is guided and directed by the intent to earn a balanced and healthy customer and company relationship. This is how technology becomes what I call “human-oriented” – contributing to how a company differentiates itself in not only its behavior but its delivery of goods and services.

🗣 Lemonade Insurance practices all three of these behaviors. And they have used radical transparency, supported by innovative technology, to disrupt the insurance market and grow exponentially over a short time period. Let’s look more closely at how this company has succeeded.

They are clearly on a mission to build and grow its business based on complete and radical transparency. Lemonade’s blend of high-tech (with its AI Bot “Jim”) and high-touch – in how it built and framed its company and policies – serves as an example of how to start with customer needs and expediently meet these needs through technology.

Trust is hard in the insurance industry because of all of the fine print and the rules and the process around filing a claim. Grounded from its inception in mutual trust, Lemonade’s claim experience involves a personal video and an honesty pledge by customers – all done via its mobile app and through “AI Bot Jim” – promising to the company and fellow members that, as a customer, you are telling the truth. This customer’s oath of honesty, recorded on video, is all Lemonade often needs to get a claim moving, and sometimes closed within minutes.

🗣 Lemonade’s mission was to figure out how to square the imbalance of the insurance relationship with the emotional toll that it takes on trust. This begins with how Lemonade gets paid. For the renter and homeowner policies that Lemonade currently offers, you pay a flat rate calculated based on your address, valuables, etc. To keep its doors open, Lemonade takes 20 percent off the top. When signing up, customers pick a charity of their choice. This is because of Lemonade’s “giveback” program where – wait for – the funds remaining after covering the 20 percent and paying claims are divided up amongst each customer’s charity of choice. With this policy, Lemonade has embedded the sharing and trusting economy into what they do.

This type of decision-making and intent for how Lemonade will and will not run its company is crucial to how Lemonade could then bravely lead the development of its technology to establish a trust-based system for how it fulfills claims. What sets up companies for success is that they have this backbone of trust in their regular operating decisions, which allows them to transfer that thinking across the operation as they operationalize and deliver with technology.

Lemonade’s commitment to trust as the fuel for growth, and its innovative use of AI, are its approach to claims. “When you trust people, they trust you back” illustrates how Lemonade treats its customers, and how the customers treat the company in return. For example, a customer put in a claim for a lost laptop and received the payment instantly. When in a surprise turn of events the laptop was returned to him, the customer contacted Lemonade to return the previously paid claim. That is not normal in insurance – and is a testament to the power of Lemonade’s trust-based model.

👉 Their innovative, customer- and technology-focused transparency model has resulted in rapid growth. In its first two years in business, Lemonade has grown from 96 customers to 250,000. And these customers are happy! Polls say 98% would recommend Lemonade to a friend, and Lemonade is currently ranked number one out of 270 renter’s insurance companies in customer satisfaction.

They’re surely doing something right, right? 😁

📝 Source:

Leave a Reply