WIRED Money takes place in Studio Spaces, London on May 18, 2017. For more details and to purchase your ticket visit wiredevent.co.uk
Here’s the situation: you arrive home from a hard day at work, open your front door and walk into the living room – already salivating at the thought of a lovely dinner in front of the television. But instantly, something seems off. You look around the room. Yes. Something is definitely different.
Then it hits you: somebody has stolen your couch.
Immediately, you start running through the problems in your head. Where will you sit? Do you still use the coffee table? Is the carpet clean enough for cutlery? But at the top of your list – the cruel necessity – will be the call to your home insurance provider, the back and forth with the different departments, and the fretting over whether or not your claim is going to be rejected (which, as it saves it money, it has an incentive to do). Possibly even before you explain how this most ungentlemanly of cat burglars got your couch down the six flights of stairs from your flat.
“Lemonade was founded on the idea that the current state of the insurance industry was frustrating, outdated, and brought out the worst in people,” says Schreiber. “Lemonade, built on AI and behavioural economics, is trying to change that. We’ve seen that a whopping 90 per cent of our consumers are first-time buyers. This means they did not have insurance before, and now they [need] coverage for their stuff and [a] home! The extraordinary benefits of having simple and inexpensive protection versus not having any coverage is significant.”
Like most startups challenging the increasingly creaky financial institutions, Lemonade has a familiar advantage: it’s nimble. Users (currently limited to certain states in the US) can make claims via their smartphones, and because the company only employs around 30 people and uses algorithms to process claims, it can make decisions more quickly, for less money. On top of that, Lemonade takes a flat fee out of its customers’ monthly payments which it uses to pay out on claims, taking away the traditional incentive for an insurer to deny claims to save cash.
“We’re currently a team of around 30 people, with a majority hailing from the product and engineering fields,” says Schreiber. “We have bots instead of brokers, and an app instead of paperwork. You can get insured in seconds, and get your claims paid in minutes. Insurance shouldn’t be more difficult than that. In fact, we recently reviewed, approved, and paid a claim in three seconds, setting a world record for fastest claim ever.”
So far, so fintech. But there’s a third hook in Lemonade’s pitch to potential customers that’s a little more left-field: when you sign up for its service, the company asks you to pick a charity. And then at the end of each year – if you and other supporters of the same cause don’t make too many claims – a portion of the money that you have paid to Lemonade is then passed on to your chosen nonprofit, as part of what Lemonade calls ‘Giveback’.
“We’re committed to social good; it’s part of our business model,” says Schreiber. “Unclaimed money goes to that nonprofit of your choice at the end of the year. By building an insurance product that is based on social good, rather than a necessary evil, we can give back up to 40 per cent of your premium to a cause you want to support.”
So, if come the end of the year you haven’t found yourself couch-less (or prey to some equally unpleasant circumstance necessitating a claim), you can at least take comfort in the thought that your money’s done some good – for more than just your insurer.
Q&A with Daniel Schreiber
1. What advice can you give someone struggling to change or evolve their organisation?
Lemonade was founded by myself and my cofounder, Shai Wininger. Both of us are veterans of the tech ecosystem and knew nothing about insurance when we first started. It’s precisely that outlier, tech-focussed perspective that we brought to the insurance industry. It’s extremely difficult to change foundations from within an organisation or an industry. When you know too much about a certain subject, that can bind your imagination and cap your creativity. It restrains you from taking
that impossible route. So if you’re looking to change or evolve your own organisation, I’d say: get an outsider’s perspective. Think big, and don’t let any conventional wisdom tie you down.
2. Share your prediction on what the industry could look like within 12-18 months.
It’s going to be a different, tech-heavy landscape. Insuretech is an extremely trendy field right now. The industry went largely untouched by technology for centuries, and the incumbents, together with technology companies, are starting to accelerate innovation within their organisations, investing in insurance startups, and digitising a lot of their operations. The question is how radical this technology change will be, and [whether] consumers see through any skin-deep technology changes they adopt.
3. What are you most excited about at WIRED Money this year?
Meeting fellow entrepreneurs and hearing their ideas for the future!
Interested in learning more about the future of finance? Join us at WIRED Money in Studio Spaces, London on May 18, 2017. For more details and to purchase your ticket visit wiredevent.co.uk