This Blockchain And AI Startup Is Transforming The Insurance Industry
The sweet name that Lemonade is for an insurance startup it sure is standing by it as it’s helping users receive renters and homeowners insurance at pretty reasonable rates. They make it possible using the power of artificial intelligence and blockchain.
Lemonade took in $57 million in premium revenue from 425,000 customers, 75% of them under 35 and 90% of them buying such insurance for the first time, in 2018 which completed its second year of offering insurance to renters and homemakers.
It is already huge expanding over 22 states of United States and aims to expand to all the 50 states as well as expand in Europe while wishing to double its revenue this year and expand.
Launching back in 2015 Lemonade was unique in concept as compared to other digital insurance brokers. Lemonade is basically a licensed insurance provider in its own right. It creates a platform for users to interact first and get signed up for insurance. It hardly takes much time and is also smart!
Lemonade also believes in giving back to the society. It thereby decided to take its profit directly out of each monthly payment and it holds the rest for claims. By the year end, once claims are paid off, the money goes to any charity of user’s choice.
Lemonade’s CEO Daniel Schreiber who was born in Britain and raised in Israel, earned a law degree in London and started working on tech mergers at a Tel Aviv firm. He quit law to cofound an internet security company at the age of 26. The startup that wasn’t even a big success did not stop Schreiber from getting marketing jobs. He even was the president of Powermat, the Israeli wireless-charger making company.
Even though he was doing well, his inner desire to give another go for his own startup kept coming back to him. By the year 2015 he realized that the insurance industry was ready for tech disruption. Even though most people want or are in need of insurance they do not necessarily trust the traditional companies.
A VC then introduced Schreiber to Wininger who was a self-taught Israeli coding and design whiz, the cofounder of almost four businesses, including Fiverr, an Israel-based marketplace for freelance work. He readily grabbed the opportunity to become the cofounder and head the tech and product design department and work with Schreiber to make this ideal version of digitalized insurer.
“When you’re an entrepreneur and you find something like that, it’s a once-in-a-lifetime opportunity that you have to go after,” Wininger said.
The soon began the process of sketching out their ideal version of an insurer which would work wholly online, would be cost-effective and easy to understand and deal with.
In May 2015 they recruited Ty Sagalow, a 36-year industry veteran who later became the chief insurance officer. They needed some expertise and he could be of great help to him. Together they decided to make Lemonade a licensed carrier itself, retaining claim liability on its own balance sheet instead of selling other’s policies.
In order to become this real, well-regulated carrier by itself, Lemonade needed more time and capital for growth. They did manage to get funded from big names. Through 2017, Lemonade raised $180 million in four rounds. In 2019, it raised $300 million, led by billionaire Masayoshi Son’s SoftBank with participation from GV (Alphabet’s venture arm), Josh Kushner’s Thrive Capital, German insurer Allianz, General Catalyst and OurCrowd.
Lemonade might be an unique and innovative take on insurance companies but it still has competition. The competitors are from Europe and it does not necessarily have to be the traditional insurance companies but also include startups like WeFox.