Peer-to-Peer Insurer Lemonade Launches in New York

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Lemonade, the insurance startup that launched in January aiming to "Uberize" insurance, will begin selling policies soon in its home state of New York.

The company announced today that it has been licensed to sell homeowners and renters insurance in the state, using its Lemonade mobile app and leveraging its take on the peer-to-peer model.

Lemonade takes a 20% flat fee at sign-up, and at the same time, insureds select a charity to which they want excess premium donated. Peer groups are created through cause selection, and claims are paid out of that group to its members. Whatever money is left over at the end of the year is donated to the cause.

Lemonade believes its model will flip the incentive model in the insurance industry and reduce fraud by creating new avenues for accountability.

"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," says professor Dan Ariely, the company's chief behavioral officer.

Lemonade insurance is sold solely through the company's mobile app or website, which asks prospects a series of questions before offering up a rate. The company says its use of "bots and machine learning" over agents helps it pass savings on to the customer while reducing the use of paper in the process.

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