Lemonade seeks to sparkle with open source insurance policy
Lemonade wants to bring more fizz to the insurance sector by throwing out the traditional policy and creating “Policy 2.0”.
“The revolution is not an apple that falls when it is ripe. You have to make it fall!”
This ambition includes a shorter policy, a digital touch and an end to antiquated English.
Daniel Schreiber, CEO and co-founder of Lemonade, says: “To create an unconflicted insurance company you have to rethink the very business model of insurance; to make it transparent you have to take a bulldozer to its foundational document: the policy.”
Lemonade says it is committed to both.
Schreiber, who shared quotes from Picasso, Einstein and the Dalai Lama along the way, says insurance policies are the “ultimate word salad”.
Its renters policy is “industry standard”, which is to say it’s 40 pages long, and contains some 20,000 words, many of them from middle-English.
Schreiber gives personal property insurance as an example of the complexity.
If a person bought a $20,000 personal property policy, they might expect the answer to be $20,000. However, he notes there’s a $1,000 limit for the removal of a neighbour’s fallen trees. But there’s a $500 limit for any one tree… and so on.
He explains: “And so it continues for 20,000 words! Any wonder people feel the deck is stacked against them?”
Lemonade’s four main goals are – make it simple, approachable, relevant and digital.
Zero exceptions may be “unrealistic”, because the price of such a policy would be “unattractive”, but the goal must be a “radical reduction in exceptions, and ensuring they’re easy to understand and remember”.
Other ideas include using contemporary English, catering for laptops and smartphones (as opposed to “nuclear fallout”), and a more concise policy.
According to Schreiber, Policy 2.0 doesn’t aim to increase or decrees coverage per se. It aims to let users choose additional coverage
Each Policy 2.0 will be “unique and dynamically-generated”, based on the choices the user made.
While people can print Policy 2.0, the firm is keen on digital. When the policy says that $20,000 of property is covered, for example, its live policy technology makes that sentence clickable, so the user can change that to $30,000.
It’s not on the market yet, as Schreiber wants consumers, advocacy groups, regulators, insurance enthusiasts, data scientists, designers, competitors, and techies, to all jump in.
Lemonade wants conversation and contributions on Github.
In terms of the open source angle, Policy 2.0 is available under a “Copyleft” licence to all our competitors, free of charge. I doubt any rival is going to appreciate that.
The first Policy 2.0 it is publishing is “Renters Insurance Policy 2.0”, though more lines, countries and languages will follow. Weighing in at 2,300 words, this Policy 2.0 is almost 90% lighter than its predecessor.
This draft was created in consultation with US state regulators, and will be submitted to all states once the community has had its say.
Until the approvals are in, Lemonade says it will continue to offer an industry-standard policy, with a view to letting users switch to Policy 2.0 once its available in their state.
Schreiber loves quotes and concludes – as Che Guevara put it: “The revolution is not an apple that falls when it is ripe. You have to make it fall!”
