Lemonade [1], the New York City-based insurtech company in April 2017 announced a strategic investment by Allianz [2], the world’s largest insurance company. Details of the investment have not been disclosed.
Solmaz Altin, Chief Digital Officer at Allianz, cited the company’s commitment to staying at the cutting edge of insurance and to helping Lemonade expand throughout the U.S. and internationally.
Allianz already had invested in several thought leadership initiatives, such as Project M in the retirement, longevity and pensions space; and it has no competitive business with Lemonade.
Lemonade provides home insurance and is operating in a limited number of U.S. locations, primarily New York City at this time. So what could be the significance of Allianz’s investment for the global employee benefits and global mobility industry, which deals with health and life insurance for corporates?
According to public comments and to sources inside Allianz, the giant insurer is always on the lookout for ideas to accelerate the digitization of its B2B products, read commercial insurance and employee benefits. The objective is to transfer ideas and experience garnered in the B2C space; adapt certain IT components and product features; and change attitudes and customer opinions. Employee benefits are becoming more often B2B2C (business-to-business-to-consumer) with the growth of flexible plans that offer employees many choices and turn them into consumers of their employee benefits. Therefore, the time-honored boundaries between business and consumer insurance may become more porous going forward. Finally, why put up with outdated tools and procedures for your benefits when banking, motor insurance, securities brokerage, etc. are available 24/7 on your smartphone?
From a cultural standpoint also, this is a courageous move for a giant, traditional, multinational financial services firm. Lemonade is “powered by artificial intelligence and behavioral economics”, not by actuaries and lawyers. It does away with “brokers and bureaucracy”, replacing them with “bots and machine learning … zero paperwork and instant everything”. And to add insult to injury perhaps, “as a Certified B-Corp, (Lemonade’s) profits go to nonprofits, (thereby) remaking insurance as a social good, rather than a necessary evil.” These citations come from the Allianz-Lemonade joint press release.
This publication never thought of its mother industry as an evil but let us recognize that the general public does not immediately think of us as promoting social good. Pun aside, the Lemonade-Allianz connection may inject some overdue fizz and freshness into an industry too often seen as stale, boring and unfriendly.
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