Does anyone know how actually Lemonade works?

or when they will start filing with the NY insurance regulators?

They have been in stealth for a long time since raising that large seed round in December. At the moment it is guessing - if anybody really knows they are probably under NDA.

Found this regarding Lemonade,

Thanks @KarmaCoverage the CB Insights conference video archives are great. The two problems he mentioned are well understood. @amy.radin has written well about the agent distribution problem ( The answer is simple - sell direct. The conflict of interest at the heart of the industry is expressed eloquently but he is still being stealthy about how. In some segments where claim is binary eg Life it can be easy. For P&C and Health, the complexity of claims process seems to defy disruption?

When I spoke with the f500 guys the agent distribution issue came up, seemingly initially with an assumption that the agents would be replaced with AI, Direct efforts, or self serve web interface.

For 2 reasons, I cautioned against this idea, and encouraged a refocus on supporting the agent role. First it is part of how KarmaCoverage works, but more importantly in a networked world the agents have a natural role as a super connector node.

The economic relationship between carrier & agent will morph, but carriers who focus on shrinking their agent force will likely see a backlash after executing the plan. Efforts would be well deployed in better enabling existing agents, and expanding the definition of “agent” in pursuit of growth in the agent force.

Thank you @BernardLunn for the link to the @amy.radin post she is really on point across a few key points. A wonderful read!

I am under NDA with the firms I am working with but I can tell you that the Insurance industry is prepared to go direct and remove the broker barrier. The current broker model is broken, it does not serve any value to a business other than additional cost.

If we are open to the disruption in banking we need to be honest that this must also happen in the other institutional pillars we have “Banking, Insurance, Legal, Government, Regulatory”.

Lemonade is back by very savvy VC I believe their solution is part of a larger disruption that needs to happen within the insurance industry.

The current broker model is broken. I’m in the P&C industry as a broker, and I have a hard time reconciling a few things in any way that no change to the current broker model occurs.

10-15% commission not= New viral product design + new models seeking higher efficiency + new digital methods

I just cant figure a way to make that equation add up without the a reduction on the commissions side. To boot, most of the actual tasks that we do as agents are tasks that are very easy to build a bot to automate. We already have a prototype bot that goes and logs in and quotes out the risk, and we have telecom software which we can hook up to the bot for an almost self serve quoting experience.

The role of the broker could go a number of ways.

There is the idea that the population shrinks and concentrates and brokers just get fewer and bigger. This sells well to brokers but I think most over look that the industry will likely be shrinking (surly auto) so they may end up running faster to stay in the same place.

There is the idea that carriers will go direct and want to own the customer relationship. Certainly there is data flow advantages to owning the cust relationship. This is a valid idea to an extent, but I think execution could get tricky and just going to digital distribution is not a seem like enough to unseat the personal relationships that exist with some brokers (not all, many are very transnational).

We could see, (this depends a lot on how P2P is implemented) and expansion in the definition of what a “broker” is, and if a service offering is designed right some customers may actually preform the role of primary contact for other customers. Or what you normally observe in any service that is designed to have virality. However, licensing laws will need to be carefully observed.

I will be looking closely at what Lemonade does in this regard. My guess is they will go fully direct, or a hybrid model with some offerings only being available direct digital, and then a hand off to a broker for other offerings.

Also very interested in how they handle the Adjusting function. I am almost 100% sure that the service will require more customer engagement in the adjusting process. The “peer pressure” must enter the offering in a number of ways.

@KarmaCoverage It is a similar debate in the Wealth Management business (which is just a bit further ahead than Insurance in change). Will the human adviser be replaced by AI and mobile UX? The consensus emerging (which I agree with) is that the future is an empowered professional. Example analogies - you still want personal service from a doctor but you expect them to use modern tech such as MRI. Or you know that 99% of the time it is a robot flying the plane, but you want that pilot for “emergency exception handling”. I can envisage 99% automation but aiming for 100% automation strikes me as a mirage.

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Early versions of the empowered professional model are practiced already for some time in banking. Algorithmic credit scoring (nowadays re-branded machine learning :grin:) provides the raw input which is potentially adjusted by an expert. In fact it is mainly the requirement to be able to always explain decision making that has prevented the adoption of more “sophisticated” neural networks. When things go pear-shaped you cannot blame an algorithm.

Fully automated processes are vulnerable in many other ways as well. 100% automation will likely only be adopted in use cases where human behavioral patterns are not important. Yet the boundary of responsibilities will be continually shifting as algorithms mature and (very importantly) as we learn more about when and how to use quantitative methods.

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In short, I think the human element will create the most value for any service offering around Trust. You cant have any type of financial service without Trust.

Much of the “work” that agents currently do, will be automated (AI, bots, IOT data feeds). To a degree insureds can trust in the system, but I still think humans tend to desire to trust other humans at some point in the service. We trust cars, but only because trust the mechanic who told us, “this car is safe to drive”. (you could also make an auto-pilot car analogy)

Regarding Trust, If you watch this video starting around minute 2, you can hear some of what I discussed with Pascal. I have heard him make other points at conferences that I shared with him from KarmaCoverage.

…and here around minute 20

I think after the all financial industries go through this phase change or metamorphosis, one of Agent’s core competencies will be to establish and maintain Reputation & Trust. Much more than it will be to sell new clients, push buttons, and relay pricing/terms info from the carrier to the client.

A carrier may want to exert some control here, and while that seems smart to a degree, it may not scale up as fast, or as sustainably, as leveraging existing trusted connections. I am very anxious to see how Lemonade is addressing these aspects of their service offering.