FintekNews reported on a new insurtech that launched in New York eight months ago by the name of Lemonade. It looks like this new entrant into the home insurance market has it all. A celebrity investor – Ashton Kutcher, cause-related marketing (a percentage of all unused premiums are donated to charity) and a rapid growth plan. After launching in NYC, the insurtech has moved on to regulatory approval in Illinois, and just recently won the same in California. The Golden State is a big plum for insurtech startups since it hosts the largest state population in the US. We recently reported on the launch of another insurtech – Slice – in California covering the home-sharing and ride-sharing sectors. Back to the insurtech Lemonade: they hope to be able to reach 90% of the US market by end of year. This is definitely one to watch.
“Not many people love the insurance industry. Lemonade wants to change that.
The New York City-based startup has created a new model for selling home insurance. Instead of keeping the money it doesn’t need pay in claims, the company takes a fixed rate of its customers’ premiums and donates any unclaimed money to charity at the end of the year.
Lemonade started selling policies in New York state in September, then expanded to Illinois in April. The company’s strategy is to start in some of the toughest regulatory markets first. “If you can pass regulators in New York,” co-founder Daniel Schreiber tells Inc., “you’re in good shape.”
Next up for the startup: California. As of Wednesday, Lemonade is available to customers in the Golden State. That means the product is accessible to 22 percent of the U.S. population. Schreiber says it wants to reach 90 percent of the country’s population by the end of 2017…While the company’s app is simple enough for anyone, its tech platform and low rates have a special appeal to young city-dwellers. Thanks in large part to low overhead costs, the company is able to offer rates as low as $5 for many of its renters policies.
Instead of human brokers and underwriters, Lemonade uses a custom-built artificial intelligence platform, which calculates monthly rates for potential new customers in seconds. The company tells customers up front that it will keep 20 percent of their annual premium.
Upon signing up, new customers choose the charity to which any of their unpaid money will be paid. At the end of each year, any money from the remaining 80 percent that hasn’t been paid out in claims goes to support that cause….