Startup insurer targets Pa. millennials

A new property and casualty insurance company is bringing its millennial-centric vision to Pennsylvania.

After being granted approval by the state this week, Lemonade is now offering insurance polices to renters and homeowners across the commonwealth.

Founded in 2016 and headquartered in New York City, the company sells insurance in New York, California, Illinois, Texas, Rhode Island, New Jersey, Nevada, Ohio, and, most recently, Georgia and Pennsylvania. 

Lemonade’s tech-centric model appears to be most appealing to millennials. Indeed, on its website, the insurer says 75 percent of its members are under 35.

Also potentially attractive to millennials is the company’s program for donating to charity. 

When buying insurance on the Lemonade app or website, customers choose a charity. The customer’s premiums are pooled with those of other policyholders who choose the same charity, a group that Lemonade dubs a “peer group.”

Lemonade uses the premiums collected from each peer group to pay for the group’s claims and gives back any leftover money to their common causes in an annual “Giveback Day.”

Lemonade’s use of peer groups differs from that of peer-to-peer insurers like Friendsurance, meaning that the Lemonade peer groups do not insure one another and there is no distribution model of peer invitations or referrals. Lemonade customers are grouped together only for dispersing excess premiums to charity. 

In 2017 Lemonade donated $53,174, representing 10.2 percent of the revenues Lemonade recognized between its September 2016 launch and June 30. Some of the charities Lemonade supported in 2017 included the ACLU, New Story, Robin Hood Foundation and Women in Need.

The insurer also aims to put a transparent spin on the industry by, for example, owning up to its business mistakes in humorous fashion on its transparency blog. In one post, the company said claims cost more than twice as big a share of the company’s revenue in 2016 as they did in 2017. Lemonade said the performance suggests that “our underwriting was pretty shoddy in our early days. Definitely a lowlight.”

Shelby White
Shelby White covers banking and finance, law and Lancaster County for the Central Penn Business Journal. For tips, email her at swhite@cpbj.com.

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