Lemonade CEO: Insurance Industry Had "Trust Issues" Before Facebook’s Data Breach
By Natalie Daher
Values aren’t so twentieth century. In fact, trust from consumers has contributed to insurance startup Lemonade’s success.
Lemonade’s CEO Daniel Schrieber recently appeared on Bloomberg Tech to talk about the company's receipt of a $120 million cash infusion from investor Softbank. Bloomberg anchor Emily Chang also asked Schrieber how Lemonade has fared since Facebook's recent high-profile data breach, which has given consumers reason to be skeptical.
“Insurance is a social good. It’s an economic necessity, but it’s not trusted. It hasn’t been for hundreds of years,” Schrieber said. “Trust and trust-related issues have been endemic to insurance way before the Facebook issues rose to the fore.”
In only a couple years, Lemonade has become known for its minimal paperwork and speedy claims process. The startup has also built its brand around behavioral economics and referencing a line from Urban Dictionary about insurance: “A business that involves selling people promises to pay later that are never fulfilled.”
The focus on trust is possible because of the insurance carrier’s alternative business model, Schrieber added, along with the backing of reliable financial institutions and New York regulators.
“We tie our own hands to really make sure we align with our consumers in a way that the traditional insurance players and some of the leading tech players have difficulty doing,” he said.
When a disaster like Hurricane Sandy strikes, consumers shouldn’t worry about whether insurance companies will pay their claims.
“We’re reinventing the business model,” Schrieber said. “Making a business model that is unconflicted. Creating an insurance company that is not only trustworthy but is trusting is a key part to fixing this industry.”
Writer & journalist based in NY.