Startup insurer targets Pa. millennials

After being granted approval by the state this week,Lemonadeis now offering insurance polices to renters and homeowners across the commonwealth.

Founded in 2016 and headquartered in New York City, the company sells insurance inNew York, California, Illinois, Texas, Rhode Island, New Jersey, Nevada, Ohio, and, most recently, Georgia andPennsylvania.

Lemonade's tech-centric model appears to be most appealing to millennials. Indeed, on its website, the insurer says 75 percent of its members are under 35.

Also potentially attractive to millennials is the company's program for donating to charity.

When buying insurance on the Lemonade app or website, customers choose a charity. The customer's premiums are pooled with those of other policyholders who choose the same charity, a group that Lemonade dubs a "peer group."

Lemonade uses the premiums collected from each peer group to pay for the group‘s claims and gives back any leftover money to their common causesin an annual "GivebackDay."

Lemonade's use of peer groups differs from that of peer-to-peer insurers likeFriendsurance, meaning that the Lemonade peer groups do not insure one another and there is no distribution model of peer invitations or referrals.Lemonadecustomers are grouped together only for dispersing excess premiums to charity.

In 2017 Lemonade donated $53,174, representing .2 percent of the revenues Lemonade recognized between its September 2016 launch and June 30. Some of the charities Lemonade supported in 2017 included theACLU,New Story, Robin Hood Foundation and Women in Need.

The insurer also aims to put a transparent spin on the industry by, for example, owning up to its business mistakes in humorous fashion on itstransparency blog.In one post, the company said claims cost more than twice as big a share of the company's revenue in 2016 as they did in 2017. Lemonade said the performance suggests that "our underwriting was pretty shoddy in our early days. Definitely a lowlight."View the full article from the Central Penn Business Journal at http://www.cpbj.com/article/20180315/CPBJ01/180319975/startup-insurer-targets-pa-millennials. Copyright 2018 BridgeTower Media. All Rights Reserved.

CREDIT: Shelby White