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Lemonade Reports 28% Share of New Business in New York Renter’s Insurance

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Lemonade, an U.S. property/casualty insurance company “powered by artificial intelligence and behavioral economics”, in June 2017 released two surveys conducted in April 2017 that appear to indicate it had overtaken Allstate, GEICO, Farmers, Liberty Mutual, Progressive, State Farm, USAA and all other legacy insurers, when it comes to first-time purchasers of renter’s insurance in New York State.

The first of two Google surveys (500 respondents) compared Lemonade’s market share in renters insurance to that of other leading insurers and pegged Lemonade at fifth place with an overall market share of 4.2%, behind GEICO, State Farm, AllState, and Liberty Mutual. According to the second survey, among the 60 (12%) respondents who bought their first policy since January 2017 (i.e., new business), Lemonade commands a 27.6% share and the top rank. Whether the two samples surveyed are representative (unbiased) is not known.

A Certified B-Corp, where underwriting profits go to nonprofits, Lemonade launched in September 2016, aiming for zero paperwork and “instant everything”.

Allianz in April 2017 bought a share in Lemonade’s capital, being “on the lookout for ideas to accelerate the digitization of its B2B products”

Of course, as an non-life product for the individual market, renter’s insurance is as far from employee benefits as it gets. And New York State is not a proxy for the entire world. Therefore, it is easy (and reassuring) to dispel Lemonade’s significance to the global employee benefits and to the global mobility industry.

At the same time, Lemonade’s quick development apparently shows that there is an appetite for products and services that offer real-time, online underwriting and claims management; for sleek user interfaces and communications; and/or for non-profit insurance.

What is striking is that many group life, health or pension carriers or TPAs operate websites and mobile apps with online enrollment and claims handling that are on a par with Lemonade’s processes and interfaces. And, mutual insurance companies are by definition not-for-profit entities, as much as any B-Corp might be. So how comes the likes of Lemonade can claim they offer a totally different business model and customer experience from incumbent insurers?

As far as this publication is concerned, it remains to be seen how Lemonade will perform under severe adverse events (think Hurricane Sandy in 2012), how underwriting profits will be shared (think reinsurance), how it will develop outside New York, and how it will branch into other, more complex products that renter’s insurance.

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