Brokers Begone

Two industry outsiders are using AI and do-good marketing to make the centuries-old property insurance business millennial-friendly — and make themselves rich.

- Jeff Kauflin And Kristin Stoller

IN THE SUMMER OF 2017, a Los Angeles man in his mid-20s put on a necklace, blond wig and makeup and made a cellphone video describing how his camera and other electronics had been stolen. He submitted the video to his renters insurance provider, Lemonade, which paid the $677 claim in two days. Three months later, dressed in jeans and a T-shirt and using a different name, email address and phone number, the same man submitted a video claim for a stolen $5,000 camera. But this time, the algorithms that are a crucial part of Lemonade’s highly automated systems flagged the claim as suspicious. Last year, the persistent fraudster, this time wearing a pink dress, tried again, only to be foiled once more by Lemonade’s computers.

Using artificial intelligence, a mobile app and other techcentric methods, Lemonade founders Daniel Schreiber and Shai Wininger are turning the centuries-old business of property insurance into a Millennial-friendly consumer product. In 2018, its second full year offering renters and homeowners insurance, Lemonade took in $57 million in premium revenue from 425,000 customers, 75% of them under 35 and 90% of them buying such insurance for the first time. Already operating in 22 states, the 170-employee New York-based startup expects to double revenue this year and expand to all 50 states and Europe. To fund that growth, Lemonade raised $300 million in April at a valuation, says a source, of more than $2 billion.

That would make the founders’ combined 20% stake worth in excess of $400 million — not bad for two middle-aged guys who until 2015 knew almost nothing about the insurance business.