Can Peer to peer insurance startups really insure a home for $35?

peer to peer insurance P2P

P2P companies are beginning to cause a disruption in an industry worth over a trillion dollars.

New peer to peer insurance startup strategies that had never earned much notice are starting to become disruptive to the industry. Among those new insurers is Lemonade, a peer to peer lender. It recently obtained its New York state license as an insurance carrier.

Lemonade will be selling exceptionally inexpensive homeowners and renters insurance.

The intention of the new Lemonade peer to peer insurance company is to sell policies for well below the standard rate. In fact, it will offer homeowners insurance policies with premiums as low as $35 per month, while renters will be able to pay as little as $5 per month for coverage.

The company intends to keep its insurance rates way down by having digitized the complete coverage process. Instead of having insurance brokers and sales employees who need to complete rounds of paperwork for sales and claims, AI systems will do the job.

It is unclear as to how safe consumers will feel with AI based peer to peer insurance but the cost is very affordable.

peer to peer insurance P2PLemonade explained that tech is the key to its affordable premiums. The P2P strategy means that the members of the group pool the premiums they pay. Claims made on the policies are paid out of the pool that has accumulated from the premiums. With Lemonade, policyholders choose charities for the creation of the pool.

According to the president and co-founder of the insurance company, Shai Wininger, “Technology drives everything at Lemonade.” He went on to say that “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.”

Moreover, Lemonade has adopted the growing business trend of social responsibility. It is seeking to be seen as a business that looks beyond itself in terms of providing benefit. There is a 20 percent fee charged by the company on contributions. The remainder is used for the payment of claims and any leftovers are donated to charity as chosen by the customer him or herself. This strategy is used instead of keeping the premiums as additional profit.

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2 Thoughts to “Can Peer to peer insurance startups really insure a home for $35?”

  1. IAN YOUNGMAN

    As my new “Peer to Peer Insurance: report shows, there are several global p to p insurers , brokers and platforms already active and twice as many getting ready to launch

    The insurers and brokers mostly use a system of pools of customers- rather than the traditional one pool. They have one thing in common,they promise refunds to all pool members if the pool has a good claims record after each year. Lemonade is the first to demand that the customer- who they boast has total control – give that money away to a pre- selected charity and also demand that all customers provide a video reocrd of any claim, and Lemonade fixes all prices.This suggests a top down approach to customers, compared to the customer control many have- even up to deciding whether or not a clam is paid, what the cover is, or what to cover.This suggests that lemonade has not quite grasped the point of peer to peer of making life simple and passing control back to the customer.

  2. Ryan

    Wonder what lenders will think of this, and what it looks like in the event of a catastrophe. Could be interesting to watch.

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