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P2P Insurer Lemonade Is Up and Running — Here's the Lowdown

by Precise Leads

November 10, 2016

Lemonade recently released platform statistics for their first 48 hours. Here’s what insurance agents need to know.

As 2016 nears its close, we can expect the inevitable: leaves will fall, temperatures will drop, and tech start-ups will continue to disrupt the insurance industry. Of the young companies that have recently gotten their start, none may have quite as much potential as Lemonade.

In late September, the New York-based Lemonade became the first peer-to-peer insurance company in the U.S. The company differs from most of its insurtech peers in that it possesses an insurance license — while most start-ups streamline a single part of the insurance process, Lemonade strives for vertical integration. The unconventional P2P home and renters insurer recently shared the platform statistics for their first 48 hours, and the data shows significant promise for the company’s future.

Turning Lemons into Lemonade

Lemonade’s co-founders, Daniel Schreiber and Shai Wininger, hope that Lemonade gives consumers more control over how their claims are reviewed and eliminates the need to interact with an actual agent. To achieve this aim, they have set up a digitized system of automated registration, instant claim assessments, and peer premium pools.

Lemonade works by pooling clients into small groups based on their choice of charitable cause, and donating all underwriting profit to organizations in their chosen category. While this approach does not differ considerably from more traditional premium grouping programs, the real factor that sets Lemonade apart is its ease of use.

Lemonade delivers near instant payment for the majority of property claims, with the review process beginning as soon as a claim is submitted. With much of the current frustration with traditional insurance agencies targeted at slow legacy processes, Lemonade’s streamlined approach can be expected to smooth over these issues and win customers’ loyalty. Judging by the company’s recently released data, it already has.

The First 48 Hours

Lemonade is currently operating only in New York, but that limitation hasn’t slowed the company down. In Lemonade’s first 48 hours, it sold 142 policies and generated $14,302 in gross written premium — four times more than its most optimistic prediction. Over 36,000 individuals visited the site during this time, with 22,700 coming from the U.S. and 4,570 from New York alone.

Promisingly, 14.8% of the New York visitors who requested a quote ended up buying. Many of these individuals were converted from long-standing insurance institutions, with 22% coming from State Farm, 18% from Allstate, and 14% from GEICO.

Where Does This Leave Insurance Agents?

While the above figures are certainly impressive, traditional insurance agents have nothing to fear when it comes to job security. There is clearly a market for insurtech solutions, but the average client still prefers to make their final insurance purchase under an agent’s guidance. As a recent study from the Local Search Association concluded, “63% of consumers prefer to speak to an agent on the phone or in person...even after using the web to conduct their preliminary research and compare their options.”

While the insurance industry changes around them, the value of agents rests in their ability to build lasting relationships — something that apps like Lemonade simply aren’t capable of. At the end of the day, the digitization of the insurance industry isn’t a burden for agents — it's an opportunity! By embracing new technology while giving consumers the personalized experience they’re after, agents can continue to stay competitive in the evolving insurance landscape.

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