Fintech profile: Lemonade, the AI-driven insurtech
Lemonade is a unicorn on the rise. Here, we take a closer look at what makes the AI-driven business tick
As of December 2019, there are more than 400 unicorns worldwide - that’s according to the aptly named Global Unicorn Club report from CB Insights. A significant number of those, private companies valued at more than $1bn for the uninitiated, are firmly entrenched in the financial services sector.
One such company is Lemonade. The New York-based business uses artificial intelligence, chatbots and other innovative technologies to disrupt the home and rental insurance sectors. It recently appeared in FinTech magazine’s Top 10 Unicorns list, which provided a comprehensive snapshot of those most innovative companies to achieve this coveted status. Here, we take a closer look.
So long, tradition
Lemonade reverses the traditional insurance model. The company, currently valued at $2bn, was founded in 2015 by CEO, Daniel Schreiber and President, Shai Wininger.
The pair are both seasoned tech entrepreneurs. Schreiber, for example, was previously President of global leader in wireless energy Powermat and was behind its growth into the default feature for several leading smartphone manufacturers. Wininger has form, too. Lemonade is his seventh startup company, having previously formed businesses including Handsmart Software and Mobideo Aerospace.
In Lemonade, they are responsible for bringing a new business model to insurance based on innovative technology and behavioural economics.The latter refers to the effects of psychological, cognitive and emotional factors on people’s economic decisions.
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And it’s here that Lemonade is leading the way thanks to Maya, its own chatbot. Maya uses AI technology to create and deliver personalised insurance policies, and handle claims, for customers without requiring insurance brokers. Or, as Lemonade explains it: “the perfect coverage for you. It couldn’t be easier, or faster”.
Simple and rewarding
Lemonade prides itself on its simplicity and ease of use. It was, it says, “built on a dream to surprise customers with a level of experience that’s out of this world”. Speed is a key advantage of using AI technology; Maya can offer a policy in a matter of seconds without any paperwork or phone calls and with full transparency.
There's an additional benefit to its model, too: the company takes a flat fee to run everything and pays its claims quickly. If, after this process, there is any money left, Lemonade gives it to good causes. It calls this process 'Giveback' which, it says, is built on a mission to "transform insurance from a necessary evil into a social good". To date, the initiative has seen money donated to the funding of a water system for a village in Africa and providing meals for families in Central America.
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