Lemonade, the New York-based startup billing itself as the world’s first peer to peer insurance company, today announced it has opened for business, and is “licensed as a full-stack insurance carrier” by New York State. The insurer says that homeowners and renters in the state can now get insured and settle claims instantly, anytime and from any device at www.lemonade.com or through the Lemonade app.

“Technology drives everything at Lemonade,” comments Shai Wininger, president and co-founder. “From signing up to submitting a claim, the entire experience is mobile, simple and remarkably fast. What used to take weeks or months now happens in minutes or seconds.  It’s what you get when you replace brokers and paperwork with bots and machine learning.”

Lemonade touts extremely competitive rates, reporting that its homeowners policies start at $35 per month, and renter’s at $5 per month. Lemonade asserts that the largest U.S. insurers charge entry-level-renters between 2x to 4.5x more for equivalent coverage.

Lemonade’s business model includes an annual “Giveback,” which the carrier explains as follows:

Lemonade treats premiums as the property of the insured, not the insurer, returning unclaimed money during its annual ‘Giveback’.  Giveback is a unique feature of Lemonade, where each year leftover money (‘underwriting profit’) is donated on the customer’s behalf to a cause they choose. Cause-selection creates virtual groups of like-minded people, or ‘peers.’  Lemonade uses each group’s premiums to pay their claims, giving back leftover money to their common cause.

“It’s not our money,” comments Daniel Schreiber, CEO and co-founder at Lemonade.  “We repeat that sentence like a mantra, and have it emblazoned on our office walls. We never want to be in conflict with our customers. We never want to make money by denying claims. And that means giving back underwriting profits. Every year.  It’s not our money.”

Lemonade make the case that Giveback has the additional benefit of helping to address fraud.

“Knowing that every dollar denied to you in claims is a dollar more to your insurer, brings out the worst in us all.” comments Dan Ariely, a noted professor of psychology and behavioral economics who has taken on the role of Chief Behavioral Officer at Lemonade. “So we architected Lemonade to avoid conflicts of interest. We take a flat 20 percent fee, and give unclaimed money to a cause of the policyholder’s choice. Since we don’t pocket unclaimed money, we can be trusted to pay claims fast and hassle-free. As for our customers, knowing fraud harms a cause they believe in, rather than an insurance company they don’t, brings out their better nature too. Everyone wins.”

Lemonade reports that it is rated ‘A-Exceptional’ by Demotech, regulated by the State of NY, and is reinsured by Lloyd’s of London, Berkshire Hathaway (National Indemnity) and other companies.

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