Lemonade

Forget everything you know about insurance

#4 Product of the WeekSeptember 21, 2016
+1

Lemonade Insurance Company is a licensed insurance carrier, offering homeowners and renters insurance powered by artificial intelligence and behavioral economics. As a Certified B-Corp, where underwriting profits go to nonprofits, Lemonade is remaking insurance as a social good, rather than a necessary evil.

Around the web

Reviews

Discussion

You need to become a Contributor to join the discussion - Find out how.
Shai Wininger
Maker
@shai_wininger · Founder @ Lemonade.com & Fiverr
Morning Hunters... I want to introduce you all to Lemonade, the world’s first full-stack insurance company that is powered by bots, stunning design and a good heart. We ditched agents and paperwork, and built an entire insurance company from the ground up to provide users with an experience that’s fit for the 21st century. We wanted to make insurance instant, smart, honest and delightful. But wait, that’s not all. We’ve discovered a way to hack how insurance works! It turns out that on average, about half of the money we all pay insurance companies actually goes to cover for claims. The rest is taken for their expenses and revenues. Now, this is a big deal. It means that insurance companies earn more when we’re paid less (or slower), and explains why so many people have terrible experiences around claims. By design, insurance companies hate to pay because it hurts their bottom line. Lemonade works differently. We take a flat fee upfront, pay for claims and expenses, and give back everything that's left to causes our users pick. Doing this steers us away from that conflict, and when claims come, we’re happy to pay them fast because it doesn’t affect our revenues. This is why we’ve taken on the challenge of building a full stack insurance company (which is fucking hard btw). Starting fresh was the only real way to break the vicious cycle of people not trusting insurance companies and companies not trusting people. Give us a try! I’d love to hear what you think. Shai Wininger Chief Lemonade Maker (The Lemonade App is available for iOS and Android)
Haim Pekel@haimpekel · CEO & Co-founder @ Press on It
@shai_wininger In which countries do you operate? Also, what happens to the accounts if your company shuts down (kudos btw, it's not an easy task and this is a field ripe for innovation :)
Shai Wininger
Maker
@shai_wininger · Founder @ Lemonade.com & Fiverr
@haimpekel we've launched NY and will gradually be rolling out additional states soon. As to your second question - insurance companies have to go through strict regulatory compliance process to make sure they stay solvent. In any case, we're financially rated A-Exceptional and are backed by the biggest reinsurers in the world such as Lloyd's of London, Berkshire Hathaway National Indemnity and XL.
Clement Ho@clemmakesapps1
@shai_wininger This is wonderful. Looking forward to this making it's way to Texas!
Jonathan Hursh@jonathanhursh · Founder @ Utopia
@shai_wininger This is so refreshing to see. And finally, a gamechanger on Product Hunt. This should encourage more developer/founders here to turn their considerable talents into much bigger things than I generally see here.
Joshua Dance@joshdance · Engineer, Product Manager, athlete
@shai_wininger Why pay out the extra to causes? Why not keep for a black swan event?
Alex Harvey@alexsandrharvey · CEO & Founder at Illuminate Design
@shai_wininger Wonderful, wonderful job. I'm ready to buy it, tell all my friends, and put in my earnest request for Florida to be next. :) Cheers!
Clark ValbergHiring@clarkvalberg · CEO at InVisionApp.com
@shai_wininger this is incredible! Been waiting for this to launch and it's far more than I expected!
Brian Lee@kay0stheory · code monkey @ theymadethat
@shai_wininger Business insurance someday?
J. Alexander Curtis@_jacurtis · Co-Founder, Yagi Telecom
@joshdance @shai_wininger Because if they pay the extra to causes then they can avoid oodles of taxes which effectively still helps their bottom line. While also making a great marketing tool.
Cou Kalantary@couroche · Founder, DarwinBeats
@shai_wininger @haimpekel On your website, when you enter an address outside of NY, I recommend you say something along the lines of "We're not in your city yet, add your email below to be notified as soon as we are (or try again with a NY address)"
Shai Wininger
Maker
@shai_wininger · Founder @ Lemonade.com & Fiverr
@joshdance great question. well, black swan events are covered by our internal and external reinsurance (the largest reinsurers in the world cover Lemonade), but giving away the money that is left after paying claims changes everything. In a nutshell, it prevents us from ever having an incentive not to pay claims, and allows us to pay most of them instantly - because it's not our money, it's our insured money.
Aaron Pearson@pearsonaaronj · Managing Director @BitBranding
@clemmakesapps @shai_wininger Us too, very cool concept!
Roi Ziko@roiziko
@shai_wininger - First of all - good luck. An amazing product. Do you plan to launch Lemonade in Israel anytime soon?
Avi Parshan@avi_parshan · Android Developer, YouTuber
@roiziko @shai_wininger I would like to know as well! Also how are you managing fiverr and lemonade at the same time?
Shmuel Apel@shmuel_apel · Marketer
@shai_wininger Pretty Please! 🙏
Benjamin Kimo Twichell@benkimotwichell · Digital Nomad Marketing Consultant
Maybe I'm missing something obvious, but how is this p2p? Are you considering it p2p because it's not a 'traditional' insurance agency?
gil sadis
Maker
@gilsadis
@benkimotwichell I think this can help -
. lmk ;)
Benjamin Kimo Twichell@benkimotwichell · Digital Nomad Marketing Consultant
@gilsadis I love the model (and really wish you had travel's insurance!!) but I see p2p insurance as a literal other person insuring me. Perhaps I'm just being too limited in my view of what p2p is ;)
gil sadis
Maker
@gilsadis
@benkimotwichell Thanks for your support. I suggest you'll watch the video above and I you'll see how we vision p2p. The tl;dr; of this video is that Lemonade is behind every policy. We're a fully licensed, A-rated insurance carrier and ready to go.
David Heimann@david_heimann · Co-Founder, Purple
@gilsadis @benkimotwichell I'd agree that I don't really think this constitutes P2P distribution. I like the idea itself but marketing it as P2P insurance feels a little disingenuous :/
Jared Krause@thejfkshow · Sr. Art Director @ VML
@gilsadis @benkimotwichell Yeah, in no way does this make sense to call it P2P.
Jonathan Hursh@jonathanhursh · Founder @ Utopia
@gilsadis Agree. I think you should def change the P2P messaging. First, because it's misleading. Second, because I psychologically feel less secure as it's seems insurance shouldn't be left in this individualized realm.
J. Alexander Curtis@_jacurtis · Co-Founder, Yagi Telecom
@benkimotwichell Yes I was equally confused. To me when I saw "P2P Insurance" I thought maybe it was a marketplace where accredited investors were backing individuals. While the service is new and interesting, I don't see how it is P2P.
Zaheer Merali@zaheer_merali
@gilsadis @benkimotwichell @shai_wininger I like the transparency, the giveback model, etc. Really quite neat. But what you've described on your site and in your video doesn't appear to fit what P2P means. Based on what I've read and watched today (please correct me where I'm wrong on this), Lemonade is a nicely packaged and marketed insurance arbitrage... you take a flat fee and reinsure the risk with large reinsurance co.s… cut out the brokers and agents and use tech to get the cost down so your 20% take covers your operating expenses. This arb model works as long as what you're charging after your flat fee (i.e., 80% of premiums charged) covers the reinsurance premiums (probably a reasonable assumption unless reinsurance gets repriced after some major losses - hurricanes?earthquakes?etc). Given the cost of brokers/agents and woeful tech/claims service in traditional insurers, I think you've got quite an interesting opportunity... but it doesn't seem to qualify as P2P.
Stuart McCroden@mccroden · (undefined)
@_jacurtis @benkimotwichell The insurance you own right now is peer2peer! All policyholders are insuring each other. Literally how insurance came to be, also called risk pooling. It's just a marketing spin.
gil sadis
Maker
@gilsadis
@zaheer_merali thanks for your support. Not sure what the qualification process for being P2P is. A lot of people think different things about P2P and that's ok. What we mean by P2P is that we use each group's premiums to pay their claims, with leftover money going back to the group's common cause. To us P2P is a shorthand for: 'it's not our money'!
Zaheer Merali@zaheer_merali
@gilsadis Thanks for clarifying. No qualification process needed 😉 I guess it's still not clear to me how your peer group model is different to that of a traditional insurer in order to significantly reduce claims and claims costs and/or dramatically lower customer acquisition and retention costs. When I saw your P2P marketing tag line I think I was expecting something a little different, that's all. Best of luck with the journey ahead. It's great to see people tackling really interesting problems.
Shai Wininger
Maker
@shai_wininger · Founder @ Lemonade.com & Fiverr
@benkimotwichell You're right to think of it that way - and in fact, it's how we started this, and how Lemonade works on the most fundamental level. People who care about the same causes you care about make up the pool of money (their premiums) from which we will calculate the return to that cause, but what we've discovered along the way is that you have to have a platform to run the show. There are many reasons why, but the main ones are that Insurance is a highly regulated business and letting people insure each other without management is against the law. Another reason is, that not being able to get paid for claims could be a life-changing event for some people. This is why it's not recommended (nor is it safe), to rely only on each other without the backing of a stable, well funded centralised platform that can handle all the regulatory requirements and cash reserves needed. @benkimotwichell @benkimotwichell @david_heimann @thejfkshow @jonathanhursh @_jacurtis @zaheer_merali
Benjamin Kimo Twichell@benkimotwichell · Digital Nomad Marketing Consultant
@shai_wininger Hey Shai, don't want to keep beating it in here, but while your points may be great company mission statements, none of them make it p2p. "People ... make up the pool of money (their premiums) from which we will calculate the return" = the exact same financial structure as a normal insurance agency. You guys have figured out a great trick to massively improve the quality and experience of insurance, but it's simply not p2p. In the end Lemonade is a standard insurance structure, which donates the non-claimed returns to a charity of the users choice. Peer to peer means literally that, from one individual to another. Lemonade is an institution. Benevolent missions and structure do not change this. Saying it is p2p is misleading, even with a super stretched definition of p2p.
Bram Kanstein (@bramk)
Hunter
@bramk · Creator of @startupstash
Big launch of an awesome new #insurtech company today - they're on a mission to change the insurance world - @shai_wininger & co can tell you more!
Yoav Aziz@yoav_aziz · Head of Growth @ Yotpo
Amazing design & on-boarding. Good luck!
gil sadis
Maker
@gilsadis
@yoav_aziz Thanks! Glad you liked it :)
Matt@fightn4food · creative, Every Wednesday Night
Why not return the money to your customers?
Daniel Schreiber
Maker
@daschreiber · CEO & Co-founder, Lemonade
@fightn4food We're in total agreement 'spiritually'. However the law in NY doesn't allow that right now - but we're working on updating the law! At the same time we're hoping that even once the law changes customers will still choose to give the money to a cause. It's nice to have insurance were all parties agree that unclaimed money goes to a good cause. See Professor Ariely's explanation here https://youtu.be/6U08uhV8c6Y
Justin Mares@jwmares · Co-author, Traction Book
@daschreiber @fightn4food what happens if your claims are larger than your capital pool - do you charge users more? Claw back money from charities? How does this work? As far as I know most insurance companies have huge pools of capital for this reason, which is why they don't aggressively lower rates all the time.
Alex Barnes@alexbarneshere · Strategy & BD, Knotel
@jwmares @daschreiber that's what reinsurers are for. As @daschreiber mentioned, they are reinsured by A rated carriers (insurers of the insurers). I also agree that this is not p2p in the sense that most people would imagine it to be. I think direct to consumer (no brokers) is more fitting.
Brian Lee@kay0stheory · code monkey @ theymadethat
@daschreiber why not make it a co-op instead so that there's a larger pool?
Siddhant Patel@siddhant_patel
@fightn4food This is how one of the makers justifies it somewhere else in the comments - "In terms of why we're giving it to charity, part of the thesis is that people feel entitled to embellish claims (25% say so to pollsters) and that this creates artificially high claims ratios. Knowing over-claiming is impacting a cause you believe in, rather than an insurance company you don't, creates a self-fulfilling dynamic where people claim more responsibly and therefore charities get more" This makes absolute sense.
Matt@fightn4food · creative, Every Wednesday Night
@siddhant_patel Thanks for looking that up and finding those stats... that's interesting. I would still think the 'cause' people care most about is themselves or their families. I think If you don't happen to have THEIR specific cause, then they'll continue to overclaim. I'm just a firm believer in giving your customer your max value. I believe both these approaches add value. I just know several friends and I have wanted an insurance company that paid US back in some way and I thought this was it.
Stuart McCroden@mccroden · (undefined)
@daschreiber @fightn4food You could if you were a mutual insurance company.
gil sadis
Maker
@gilsadis
@fightn4food @siddhant_patel we don't think we can eliminate fraud completely, but we have some good ideas about how we can reduce it. We really believe that we can build an insurance company that believes in people and people believe in it. Check out this video for more information about this - https://youtu.be/6U08uhV8c6Y
Zev Lapin@bbzeven · Cofounder, Parachute.co
@daschreiber I like the cause contribution component. How does it work in terms of tax write offs? Is lemonade donating to charity or am I? Also, like many others in this thread, I think the "p2p" lingo detracts from the message, which can really be much stronger. Instead of me wondering how this is p2p, I could be thinking "I get it, Insurance that delights and wants to help me get my money" - When I went to the landing page, I couldn't appreciate all the good stuff because I was so busy trying to understand what p2p insurance is.. Just my two cents.
Shai Wininger
Maker
@shai_wininger · Founder @ Lemonade.com & Fiverr
@jwmares @daschreiber @fightn4food we've prepared for this, and even plan for it. Our models predict that on average a certain % of groups will consume their pool entirely. This is why we've got external reinsurance that covers groups on the group cohort level - which is the first time reinsurers have done that - ever! This way, there no chance money will run out. It's also completely seamless to our users, so if the money in the pool runs out - we continue to pay instantly.