Peer-to-peer insurer Lemonade launches in New York

New York Post:

A New York startup aims to disrupt the insurance industry — and the key, it says, is to get folks to behave.

One-year-old Lemonade went live Wednesday in New York with a slick mobile app that offers homeowner’s insurance for as little as $35 a month and renter’s insurance starting at $5 a month.

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Lemonade’s solution is to charge a flat fee of 20 percent for coverage so it has no incentive to fight payouts. At the end of the year, Lemonade will instead give any excess cash from its monthly premiums to a charity chosen by the customer.

“Our model suggests we’ll be giving more to charity than to our own profits,” Schreiber said. “But we do that not out of altruism. It’s enlightened self-interest.”

Lemonade has tapped Dan Ariely, a psychologist and economist at Duke University, as its “chief behavioral officer.” Armed with Ariely’s research, Lemonade is also betting it will earn customers’ good will — and their honesty — by paying claims quickly.

Read the whole story: New York Post