Lemonade Insurance teardown - Decoding the Insurtech company's rapid expansion plans
Issue #2 : Your weekly fintech teardown
Hey fellow analysts! Hope you'll are all safe and doing well in these trying times.
In today's teardown I will explore Lemonade main offerings including it's newly launched pet insurance, it's business model, future expansion opportunities and it's competitors.
Lemonade is an AI based insurance company founded in April 2015 by Daniel Schreiber and Shai Wininger and in stealth which launched it's product in the last quarter of 2016 in New York describes itself as the world's only public benefit insurance company awarded a B-Corp certification in May, 2016 rebuilding insurance as a social good rather than a necessary evil according to their CEO.
Why it was founded?
Insurance as a product was not meant to create a giant profit making business but instead it was conceptualized to help communities support each other, create trusting relationships between neighbors and to share risk. But today insurance has become a process with endless paperwork and insurance agents. To solve this broken system, Lemonade was born.
The products :
Lemonade provides instant renters, condo, homeowners and pet insurance(currently undergoing the regulatory process) starting from 5 dollars, 25 dollars. Lemonade takes a fixed fee out of the monthly payments of each peer group and uses it in part to pay for reinsurance and other expenses, while the rest is used to pay each groups claims. Any unused premium money at the end of the year is donated to the charity, non-profit or cause of the groups choice(policyholder's who care about the same causes are treated as a virtual peer group) .
The process and the business model
How Lemonade Works (from it's website)
Lemonade reverses the traditional insurance model. We treat the premiums you pay as if it's your money, not ours. With Lemonade, everything becomes simple and transparent. We take a flat fee, pay claims super fast, and give back what’s left to causes you care about.
What Lemonade does is it takes conflict out of the picture by replacing agents and massive amounts of paperwork with bots and AI.
What is Lemonade's Moat :
Lemonade's moat lies in it's speed and agility as compared to traditional insurers. Any person can get insurance within 5 minutes and the claims are processed by using AI with the same speed.
Current Investors :
Aleph, Sequoia Capital, General Catalyst, GV, Tusk Ventures, Thrive Capital, Expansion VC, Allianz and Softbank from whom it has raised more than 480 million dollars to date.
Others in the Insurtech space :
Nexus Mutual, Knip, Insureon, Guevara, FinanceFox, Embroker, BIMA, etc.
Here’s what Lemonade has to say about it's aggressive expansion :
Lemonade was built with this kind of aggressive expansion in mind. Our products and technology were designed in a way that requires very little, if any, extra effort to support the different regulatory requirements from state to state, and the fact that we use bots and AI instead of brokers and agents naturally simplifies things.
Current availability :
In the District of Columbia and 26 states across the United States and in Germany
Next steps :
Expansion across Europe and global expansion plans are lined up
Connect with me on twitter : @aaron_cuthinho & @Finmetrics_
Thanks for reading.