This post is part of our new Future of Insurance series which interviews the leading founders and executives who are on the front lines of the industry to get a better understanding of what problems the industry is facing, what trends are taking place, and what the future looks like.
The following is an interview we recently had with Daniel Schreiber, CEO and Co-Founder of Lemonade.
1. What’s the history of Lemonade? Where and how did you begin?
DS: Lemonade was founded by myself and my co-founder, Shai Wininger. Both of us are veterans of the tech ecosystem and knew nothing about insurance when we first started. It’s precisely that outlier, tech-focused perspective that we brought to the insurance industry. It’s extremely difficult to change foundations from within an organization or an industry. When you know too much about a certain subject, that can bind your imagination and cap your creativity.
2. What specific problem does Lemonade solve? How do you solve it?
DS: One of the factors that stood out most to Shai and I when founding Lemonade was that there’s an inherent conflict of interest between insurance companies and their policyholders: every dollar the insurer pays for claims is a dollar less for their bottom line. We also found it mind-boggling that such a profitable industry had such discouraged consumers, and we believed that the conflict of interest was the root cause.
Lemonade solves this conflict using artificial intelligence and behavioral economics. The two are distinct and complementary and are the core elements of our business model (flat fee). A.I. displaces brokers and paperwork, reducing time, hassle and costs. Behavioral economics reduces fraud and conflict – eliminating time, hassle and costs. The combination is powerful: aligned interests remove any motivation for not paying claims, and checks the inclination to defraud an insurer. That lowers the need for cumbersome paperwork, clearing the way for A.I to take over the underwriting and claims process. The upshot is a process that is far more seamless, instantaneous, trusting and trustworthy.
3. What’s the future of insurance?
DS: It’s going to be a different, tech-heavy landscape. Insuretech is an extremely trendy field right now. The industry went largely untouched by technology for centuries, and the incumbents, together with technology companies, are starting to accelerate innovation within their organizations, investing in insurance startups, and digitizing a lot of their operations. The focus will be on using technology not only to cut costs and increase efficiency but to make insurance a delightful experience for customers. Already today we’re seeing the use of bots in getting people insured and paying claims- this is only the tip of the iceberg. Significant steps can be taken in this direction to make insurance a technology-heavy industry, rather than a bureaucratic one. And these will enable profound innovation at the underlying insurance-policy level too. For example, we launched ‘Zero Everything’ – zero deductible, zero rate hike. This is a kind of coverage that didn’t exist before and was made possible by the customer-centric organization, and the bot’s ability to lower claim handling-costs.
4. What are the top 3 technology trends you’re seeing in insurance?
Trend #1: AI/bots.
Trend #2: Social impact elements (the Lemonade Giveback, for example).
Trend #3: Emphasis on user experience/product design.
5. Why is insurance industry ripe for disruption?
DS: The current state of the insurance industry is frustrating, outdated, and brings out the worst in people. Just look at the stats: insurance fraud costs the average family $1,300 each year and 24% say it’s acceptable to pay an insurance claim. (Insurance Research Council, March 2013). These people aren’t criminals in a far-off land, they’re people like you and I, who feel it’s ok to embellish a claim since the system itself ‘rips them off.’ Insurance used to be about a community coming together in times of need, and that sort of insurance lost its way. Making insurance a social good, rather than a necessary evil, is a mission that warrants the industry as being ripe for disruption.
About Daniel Schreiber
Co-Founder and CEO Daniel is a tech leader whose passion for innovation took him from startups to the Fortune 500(and back again). As President of Powermat Daniel oversaw its transformation into an industry standard and a default feature in the world's foremost smartphones (Galaxy S6), venues(Starbucks) and cars (GM). Prior to Powermat, Daniel served as SVP Corporate Marketing at Sandisk, with global responsibility for the company’s social media, press relations, 50 web and e-commerce sites and major rebranding. During the iPod's heyday, Daniel served as SVP and GM of Sandisk's Audio-Video business unit, attaining #1 market share worldwide after Apple, and outselling all other brands combined. Daniel joined SanDisk via the $1.6B acquisition of msystems, where he served as VP Marketing and BD. He was co-founder and CEO of Alchemedia Inc., a content security software company, and began his career as a corporate-commercial attorney.