Lemonade redefining insurance with charitable donations
Published: September 23, 2016
Updated: July 24, 2018
Author: Callum Micucci
CATEGORY: Industry News
A new insurance company is launching on the promise that it is going to deliver a game-changing model to consumers and revamp the industry. Lemonade, a start-up insurer in New York is offering a home insurance solution with a twist. The company is a peer-to-peer provider that says it will donate all non-claims money to charity.
A report in the Financial Times explains the model that Lemonade will use. The company will allow users to choose the charity of choice when they are setting up a policy. Premiums will be stored from all customers who choose the same charity, with the funds paid out to the charitable cause at the end of the year.
The company is aiming to create a transparent model. For example, Lemonade freely admits that, of course, it needs to make money. To that end, the insurer will take a fixed 20% of all premiums from the start.
Daniel Schreiber spoke to the FT and said “we’re inverting the business model” adding “we have no interest in delaying or denying claims.”
Lemonade says that its model could potentially see less fraudulent claims because consumers would be aware that the insurer gives to charity. This is perhaps a long-shot hope considering many fraudsters are out for their own gain in the first place. However, Schreiber says many fraudsters see the insurance industry as an enemy and are at war with it.
The company is also aiming to be present on mobile, something that many insurance providers are accused of neglecting. From the start Lemonade policies will be available via an app and a pre-set list of charities will be provided. However, customers are encouraged to nominate their own charitable causes to expand the list.