They have been ranked below banks, car manufacturers, online shopping sites and supermarkets in terms of trustworthiness, at least per a recent global survey by accounting firm EY. Yes, we are talking about insurance companies.
Despite poor rankings, it does not stop the newcomer in the insurance industry, NYC-based Lemonade, who hopes to challenge this bad conception of the industry, by using technology and behavioural science to develop a faster, more transparent service, The Guardian writes.
“The company is working with Dan Ariely, a professor of psychology and behavioral economics at Duke University, to take antagonism out of its relationship with customers”, The Guardian writes.
The goal of Lemonade was to apply algorithms in order to speed up the process of signing up and approving claims, making it quicker and easier. This can be done by automating the services as much as possible, and will hopefully help keeping the costs on a low level.
“Lemonade is fast and transparent rather than slow and opaque,” David Charron, a lecturer at the Haas School of Business at the University of California at Berkeley told the newspaper. “Their success here will be interesting to watch and may depend on acquiring dissatisfied customers from big insurance companies.”
So far the company is doing really well, and after launching its initial service in New York in September 2016, it has filed for a licence to 46 other states, including the District of Columbia. In addition to this, the company also raised $34 million from investors like Google Ventures and General Catalysts, which brings their total revenue to $60 million.
So how do they make their money? Lemonade keeps a flat fee of 20% of a customer’s premium, and sets aside 40% mainly for buying reinsurance form firms like Lloyd’s of London in order to cover claims that exceed that is covered by the premiums. The remaining 40% is left to cover claims, and anything left goes to a charity of the customer’s choice at the end of each year.
“When they have a common cause that they’re raising money for, the thinking is that if they make a fraudulent claim, they aren’t hurting the insurance company but rather the charity or organisation they have chosen to give back unclaimed money to,” CEO and founder, Daniel Schreiber said, adding how customers can feel extra guilty if they are raising money to benefit their communities.
This article was first published at: https://www.theguardian.com/sustainable-business/2017/jan/28/insurance-company-lemonde-claims?CMP=share_btn_tw