Lemonade shakes up the insurance industry

Lemonade BI Intelligence

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US insurtech Lemonade, which offers renters and homeowners insurance online and via mobile, has announced a new product, Zero Everything, which offers policies with no deductibles.

The new product, which existing policy holders can upgrade to instantly thanks to Lemonade's "live" policies, enables users to file up to two claims per year with no deductible payments and without raising their premiums. Lemonade's policies previously came with a $250 minimum deductible.

Deductibles are a major consumer pain point, yet until now they have been ubiquitous.A deductible, sometimes known as an excess, is the amount the policyholder has to pay out to cover a claim before their insurer will make a contribution. For example, if an individual's deductible is $200, and they incur damages worth $1,000, their insurer will only have to pay $800. If the claim is for $200, the insurer doesn't have to pay anything, meaning that customers often have to foot the bill for smaller damages. Simply by filing a claim, a policyholder also often sees a hike in their premium.

Eliminating deductibles is a game changer for the insurance industry. By removing a pain point that sours the relationship between customers and insurers, and which puts many people off even buying insurance in the first place, Lemonade stands both to greatly boost customer loyalty and attract a wealth of new users. Moreover, for now it is one of very few insurance players to have made this fundamental change, which will act as a powerful differentiator and help it win even more market share. As such, the company's move will put more pressure both on other insurtechs and incumbent providers to follow its example, or risk being left at a competitive disadvantage.

Sarah Kocianski, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on insurtechs that:

Explains the structure and current state of the insurance market.
Highlights areas where insurtechs can help legacy players modernize.
Describes where insurtechs are competing with incumbents and how their models compare.
Provides case studies of insurtechs.
Outlines the legacy response.
And much more.

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