Start-ups are using new strategies to bring disruption to the trillion-dollar insurance industry.
One such company is the peer-to-peer lender Lemonade, which became a licensed insurance carrier this week by the state of New York and plans to offer home insurance policies to homeowners at $35 per month and to renters at just $5 per month. It claims to have digitized the insurance process, replacing insurance brokers and paperwork with AI robots.
Peer-to-peer insurers put customers into groups based on a shared factor, usually the type of policy. The group's members pool all their premiums, and payment for insurance claims come from the pool. In Lemonade's case, customers are asked to pick from a range of charities to create their pool.