The US based insurtech donates left over money post fee to a charity of the customer’s choice
Lemonade divulged its plans for global expansion in 2018 alongside celebrating its third birthday.
Its chief executive and founder, Daniel Schreiber was interviewed by Bloomberg News, where he declared “We’ll go global by the end of 2018.”
Schreiber explained that Lemonade was a “licensed carrier” that sells any kind of properties and casualties (PNC) insurance. He said that the company hopes to expand the lines it offers across the locations it covers.
Schreiber sees the insurance industry as an “untapped and unlimited market opportunity.” He added that the market was “vast” with insurance running into the trillions effecting every household.
He discussed the “essential role” yet unconventional way reinsurance plays into its model. Behavioral economics is one of Lemonade’s pillars, Schreiber explained that it doesn’t make money from denying claims or engender the kind of distrust that often plagues the insurance industry. He said that of this problem “reinsurance is part of the solution.”
The company takes a flat fee, with any money left over distributed to a charity of the customer’s choice, and if there are insufficient funds, reinsurance is in place.
He said: “Reinsurance partners are cardinal partners in making this new unconflicted business model that speaks to consumers and to the younger consumers in particular.” The latter being a market that the startup targeted from the offset, but it does run up and down the age bracket.”
He said: “Larger incumbents look at company’s like Lemonade and would like to mimic some of the technology that we have used or marketing messaging for the consumers that we are attracting but that really is just the tip of the iceberg.”
He stressed that the “real value” was created in the data as a result of “delightful digital interactions.”
Schreiber is no stranger to Lemonade’s mounting losses. He acknowledged that underwriting is one area in which it has struggled.
In Q1 2018 Lemonade posted an underwriting loss with its full-year accounts revealing a $15.8m drop for 2017.
He said: “What has started off as cool marketing, fast growth, technology-enabled, ends up generating the 21st century incarnation of how to underwrite risk in a way that incumbents because of their legacy systems will have a hard time following.”
SoftBank Group and Berkshire Hathaway are amongst some of Lemonade’s investors.
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