Lemonade has launched its product for home and renters insurance in New York. The start-up allows users to select a social cause they believe in, and any profits beyond Lemonade's 20% fee and money paid for claims will be donated to the cause.
The company will ask customers to nominate a charity when they buy a policy. It will then pool the premiums of everyone who has chosen the same charity, and pay their claims out of that pool. Anything that is left at the end of the year will go to the charity. Lemonade will take a fixed 20 per cent of the premiums at the start. It said that it would not stand to benefit by reducing payouts to customers. “We’re inverting the business model,” said Daniel Schreiber, chief executive. “We have no interest in delaying or denying claims.”