Michel Klompmaker
The US-based insurer Lemonade is now entering the Dutch market. This so-called “disrupter” within the insurance market does it just that little bit different than the traditional insurers. This new player simply reserves a fixed amount for costs and profits. The rest of the premium money goes to the payment of claims and what remains afterwards is donated to charities policyholders choose. Not for nothing is the company the only insurer in the Benelux with an international B-Corp label. The company is driven by social impact and bases its models on behavioral economics and artificial intelligence. We recently spoke to Daniel Schreiber – CEO of Lemonade, whose European headquarters is in Amsterdam.
Can you explain to us who you are as Lemonade, what your background is and where your ‘roots’ lie?
Daniel Schreiber: “Both Shai (Wininger, my cofounder) and I are veterans of the tech ecosystem and knew nothing about insurance when we first started in 2015. It’s precisely that outlier, tech-focused perspective that we brought to the insurance industry. One of the factors that stood out most to us when building Lemonade was the lack of transparency and conflicted interests. It was mind boggling that an industry that is performing such an important societal role, is perceived so negatively. Insurance fraud is a serious symptom of this. That’s why we made transparency, and overcoming conflicts of interest a significant pillar of Lemonade. We launched Lemonade in New York in September of 2016, transforming insurance from the ground up. Bots take care of taking out an insurance policy in just a few seconds and, unlike traditional insurance models, the company’s profits are fixed. Unclaimed premium money is donated once a year to charities chosen by the consumer. In the past year, we settled in Amsterdam with our European headquarters. After launching in Germany last year, we now offer our services in the Dutch market. We are the only insurer in the Benelux with a B-Corp certification, an independent sustainability label for companies and as you can understand we are very proud of that”.
Where does the name come from?
Daniel Schreiber: “You know the saying, “when life gives you lemons, make lemonade” which is most similar in Dutch to making a virtue out of need. When you play the ‘word association game’ with the word ‘insurance’, you get a pretty abysmal picture of the industry. Words like ‘paperwork’, ‘hassle’, and ‘fighting’ predominate. It seems that with Lemonade we’ve managed to build an alternative lexicon. We see people tweeting about Lemonade being ‘instant’, ‘fun’ and a ‘social good’. That is exactly what the name of our innovative insurance company Lemonade refers to. A good example of this is how we transformed the traditional insurance policy with what we call Policy 2.0. This is the shortest, simplest insurance policy written for the 21st century and crafted specifically for Dutch consumers with additions such as bicycle theft coverage.”
Could we say that you came up with a concept for insurances in 2030?
Daniel Schreiber: “Maybe! We like to describe Lemonade as being built on artificial intelligence and behavioral economics. The two are distinct and complementary, and are the core elements of our business model. Artificial Intelligence displaces brokers and paperwork, reducing time, hassle and costs. Behavioral economics minimizes fraud and conflicts – reducing time, hassle and costs. The combination is powerful: aligned interests remove any motivation for not paying claims, and checks the inclination to defraud an insurer. That lowers the need for artificial intransigence and cumbersome paperwork, clearing the way for A.I. to take over the underwriting and claims process. The upshot is a process that is far more seamless, instantaneous, trusting and trustworthy. We also can pay claims instantly — in fact, around a third of our claims today are paid in seconds, without any human contact. We’re seeing quite a few carriers ‘digitize’ part of the insurance process, but the infrastructure and business model is the same, centuries-old framework. It’s genuinely hard to innovate under those conditions.”
How have you been doing since your establishment in 2016?
Daniel Schreiber: “Since its launch in 2016, Lemonade went from a nonexistent brand to one of the most Googled brands for renters insurance in the US, more than many of the most funded and well known insurance brands that have been in business for decades (even a century!) longer. This turns into numbers when it comes to customer satisfaction: In the US, consumers rate Lemonade #1 for insurance products across multiple platforms, citing the hassle-free digital experience, lightning-fast claim payments, best-in-class customer service, and an unconflicted business model. Furthermore, in just under 3 years, the Lemonade community has given back almost one million dollars, simply by choosing a cause they support when getting their insurance policy. We will continue to expand both geographically and product-wise, building Lemonade to be one of the iconic brands of the 21st century. We welcome the Dutch consumer to take Lemonade for a spin, and get a policy via the Lemonade app or simply via our website”.
