2 radical ways lemon juice is upsetting the insurance market | personal financing

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Jason Hall: Let’s first talk about what is lemon juice? It’s an insurance company that’s really looking to disrupt the insurance industry and I think it’s important to understand that it’s looking to change things in two fundamental ways. Number 1, we hear about artificial intelligence. It is looking to use artificial intelligence to enhance its claims, enhance its underwriting decisions, and do more to automate much of its work that is done manually and done by people in much of the insurance industry. this is important. But the other thing that I think is just as important is how it’s organized. Again, you talked about pursuing money and understanding the incentives in companies to find opportunities and risks, and it’s structured as a public good company. It is committed to paying a portion of the proceeds to charities identified by its clients. It is also structured to take a certain share of the revenue it takes regardless of the size of the subscription. In other words, you will not necessarily make more profits from the underwriting. Then, it uses reinsurance to manage its claims obligations. In doing so, management says this is really central to their mission, to break down those barriers, and to think of a traditional insurance company. Their goal is to hold your money for as long as possible, keep that floating, reduce the amount they pay on claims as much as possible, and as a result, when I’m insured and give the incentive now for me is to inflate the claim to make sure I get as much as possible. It is very hostile. It was always this way. It’s really tough and the way Lemonade is designed, they want to partner with their customers and grow over time and by changing those incentives you can make a claim, and their AI can approve it in seconds. Some really powerful things that Lemonade is looking to do.

Jason Hall Lemonade, Inc. is owned by Jason Hall Lemonade, Inc. He owns the Motley Fool and recommends Lemonade, Inc. Motley Fool has a disclosure policy.