For a long time, the insurance industry has been stagnant. It has become dull, slow and inefficient. It is not only slow in adapting to changing technologies but even resists innovation in some cases. With the insurtech industry developing rapidly at the same time, the insurance and technology sectors inevitably clashed. Lemonade is that meeting point. It’s a new competitor in the arena that is fresh, new, fun and easy to use. Lemonade is challenging the status quo of insurance and acting as a driving force for change. Lemonade is one of the new wave insurtech companies changing how we think and use technology to meet needs we didn’t know we had.
What exactly is Lemonade, and what makes it tick?
Lemonade was founded in 2015 tackling renter and homeowner insurance. It offers policies for apartments, homes, condos and shared flats. It seems like a regular insurance company on the surface, right?
Wrong. Lemonade fully embraces the digital age and has done what hundreds of traditional insurance firms called impossible. With the power of technology, Lemonade has gone broker-less. You read right, broker-less. Individuals use the mobile app to register and sign up in a matter of minutes. After that, the entire process is paperless; users file claims through the in-app chatbot, which are then processed using advanced AI software. Some requests even go through in less than 5 minutes. All in all, users can get what they want, when they want it, from wherever they are.
So what is in Lemonade’s special recipe?
The firm has two major disruptive forces within it that drive its success. Its use of technology combined with a shift in the fundamental aspects of the insurance industry delivers a new digital age solution.
- Lemonade engages with a ‘technology first’ approach. The insurance firm describes themself as a tech firm doing insurance rather than an insurance firm using tech. Their AI chatbot makes conversation simple, concise and guides clients to precisely what they are looking for. It also minimises misunderstandings and ensures straightforward, consistent and streamlined interactions. Moreover, Lemonade’s paperless strategy utilises video recordings verified by their e-signature saving time and cutting down paper wastage. Consequently, Lemonade can do the work of thousands of people faster, more effectively at any time in the day.
- It’s finally time to get into the vital secret that makes Lemonade so good. In the early stages, Lemonade identified a fundamental problem with the traditional insurance industry. The less they pay for claims, the wealthier insurance firms will become.
The special ingredient: shifting focus
Now if you don’t know how traditional insurance firms make money, it’s simple. You pay insurance premiums, and they keep part of that amount. The less they pay out in claims, the more they can keep of your premium.
That means at the core of the Insurance Industry, cutting costs and maximising profits is the ultimate goal. This approach may be beneficial for firms, but it certainly isn’t for you or me. So that’s how Lemonade changed the game. The firm charges a 25% flat fee off the top of premiums, which means they have no reason to hold back claims because they cannot make any more money than the flat price.
Subsequently, the core components behind Lemonade have shifted the traditional model. Lemonade can now focus on what insurance firms were built for – insurance. The bottom line does not tether lemonade, and thus they can prioritise processing your claims with no reason to hold them back.
Insurtech companies and the future
Lemonade is both a guiding light and a threat to traditional insurance firms. It sends a message to the industry with a powerful ultimatum. Adapt or die. Lemonade shows the way forward for the entire industry, and firms should follow its example rather than resist it. The truth is that firms like Lemonade and other will pioneer the future absorbing obsolete industries as they go.
Conclusion
So what makes Lemonade so important? Why should you pay attention to it? Is it because of what it can do?
It isn’t because of what Lemonade can do but rather what it represents. Lemonade is part of the growing wave of insurtech companies bursting into the world. The future of business lies in new ways of thinking, in incorporating technology that caters to the changing needs of today. To stay relevant, we need to stay updated.
Thank you so much for reading, if you’d like something similar feel free to read more about Ant Financial – the fintech giant. Subscribe to our mailing list for more content!
