For using behavioral science and artificial intelligence to change the way home insurance works.

Daniel Schreiber, Shai Wininger
2016 Revenue:
New York CityNY 
$60 million
Lemonade insurance app. Photo Credit: Courtesy Company

Why It's Disruptive

There's an underlying tension between most insurance providers and their customers: Denying a homeowner's or renter's claim means more money in the company's pocket. Lemonade thinks it can turn that model on its head. The company tells its customers up front that it will take 20 percent of their annual premiums. Of the remaining money, whatever isn't paid out in claims is donated to the customer's charity of choice. "You're bringing out the best behavior in [the insurance company]," says co-founder and CEO Daniel Schreiber, "because [Lemonade] has no incentive to deny you." The company argues that this will lead to less fraud, since customers are reminded before placing a claim that they're taking money from the charity of their choosing, not from the company.

Lemonade has no brokers--it uses algorithms to determine customers' monthly fees. Signing up takes about three minutes and, thanks in large part to the company's low overhead costs, most renters' policies can be had for $5 per month. The startup is already selling insurance in New York, California, and Illinois, and its founders have the ambitious goal of reaching 90 percent of the U.S. by the end of 2017.

Biggest Challenges

While Lemonade offers both homeowners and renters insurance, its target audience is young urban dwellers--a group that primarily rents. Only 63 percent of U.S. renters have insurance. Even though the company's rates are inexpensive, for many potential customers, it will be a cost they didn't previously incur. "In a way," Schreiber says, "we're fighting against non-consumption." --Kevin J. Ryan