Peer-to-Peer In­surer Le­mon­ade Opens in N.Y.

Digital Insurance - - INDUSTRY BRIEFS -

Le­mon­ade, a peer-topeer in­sur­ance startup that launched in January, has been li­censed to sell home­own­ers and renters in­sur­ance through its web­site and mo­bile app in New York.

Le­mon­ade takes a 20% flat fee at sign-up, and at the same time, in­sureds se­lect a char­ity to which they want ex­cess pre­mium do­nated. Peer groups are cre­ated through cause se­lec­tion, and claims are paid out of that group to its mem­bers. What­ever money is left over at the end of the year is do­nated to the cause.

Le­mon­ade be­lieves its model will flip the in­cen­tive struc­ture in the in­sur­ance in­dus­try and re­duce fraud.

“Since we don’t pocket un­claimed money, we can be trusted to pay claims fast and has­sle-free. As for our cus­tomers, know­ing fraud harms a cause they be­lieve in, rather than an in­sur­ance com­pany they don’t, brings out their bet­ter nature,” says pro­fes­sor Dan Ariely, the com­pany’s chief be­hav­ioral of­fi­cer.

In Le­mon­ade’s fully dig­i­tal ap­pli­ca­tion process, prospects are asked a se­ries of ques­tions be­fore be­ing of­fered up a rate. The com­pany says its use of “bots and ma­chine learn­ing” helps it pass sav­ings on to the cus­tomer while re­duc­ing the use of pa­per.

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