Leading InsurTech startup flaunts philanthropic business model.
Lemonade Insurance announced today that 14 charitable organizations, which were selected by policyholders, will become the beneficiaries of donations that together total 10% of the company's revenues to date.
The startup's "2017 Giveback" campaign is "something our entire community can be very proud of," Lemonade CEO and cofounder Daniel Schreiber said in a press release. "While we're small, and the absolute numbers are modest, Giveback should scale as we do. Think what our industry could achieve if others adopted the Giveback way."
Lemonade said this year's donations total $53,174, or just over 10% of company revenues since Lemonade launched its web-based insurance company less than a year ago. The startup sells homeowners and renters insurance and is powered by artificial intelligence and behavioral economics.
Related: 3 reasons Lemonade's CEO wants to disrupt the insurance industry The beneficiaries of this year's Giveback include a homebuilding project in El Salvador, a well-water project in Malawi, a meal-delivery service in New York City that caters to homebound seniors, a childcare center that caters to families in need, and Teach for America, the 28-year-old nationwide nonprofit that trains and sends teachers to work in low-income neighborhood schools.
"Giveback is like a social contract among our community," Dan Ariely, the company's chief behavioral officer, said in a statement. "As we see it, 'it's not our money.' It's money our community has entrusted to us, first and foremost to help our members recover from unfortunate events in their lives, and secondly to help the less fortunate in our broader community."
Lemonade's leaders argue that digitizing insurance saves money, which the company can then funnel back into its annual Giveback. The company's behavioral science business model also fosters the idea that when policyholders know that their money will be directed toward charity, they are less likely to engage in fraud.
Families in El Salvador such as this one will benefit from new homes thanks to the Lemonade Insurance contribution to the organization New Story. (Photo: Provided by Lemonade)
The company's leadership has stated that they aspire to become available nationwide by the end of the year. In its June 1, 2017 "Transparency Chronicles," Lemonade reported that it had insured 14,315 homes and that week-over-week sales of new policies had grown by 60%. The company also flaunts the fact that nearly all of its policyholders have jumped ship from incumbent insurers.
Related: When worlds collide: Insurers and InsurTech
"We handled a total of 117 claims so far and happily paid $143,190 to our insured members," wrote Lemonade co-founder Shai Wininger. "Remarkably, 27% of the claims paid were handled and processed instantly" using Lemonade's artificial intelligence response bot, which it calls AI Jim.
According to recent research from America's Charities, 9 out of 10 American consumers expect the businesses they patronize to be good corporate citizens. What's more, the vast majority of companies that participate in philanthropic giving or volunteerism believe that doing so enhances their company brand and reputation.
Lemonade also uses its Giveback campaign to strengthen customer relationships. How? When a consumer buys a new Lemonade policy, that person is simultaneously queried for the causes and organizations they care about.
"We no longer treat our users' leftover premium money as our potential revenue because we give it back anyway," Wininger wrote in a late 2016 blog post. "And because it's not ours and we're giving it back -- we can delight our customers by doing everything painfully simple and superfast."
See also: Lemonade, Slice launch InsurTech products in California 3 InsurTech updates to the underwriting process 5 high-tech challenges (and solutions) for today's independent agents
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|Publication:||Property and Casualty 360|
|Date:||Jul 12, 2017|
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