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New Yorkers take first sip of Lemonade

Lemonade has started selling home policies to New Yorkers – the first market to get a taste of the peer-to-peer insurer’s offering.

“We’re starting with New York and plan to expand to other states soon,” a spokesman told insuranceNEWS.com.au. “Previous companies working in ‘peer-to-peer insurance’ are companies that work with existing insurance companies, brokers etc.

“Lemonade is the first licensed peer-to-peer insurance company that can actually write its own insurance policies.”

The business has signed arrangements with reinsurance partners including Berkshire Hathaway’s National Indemnity, XL Catlin and a pair of Lloyd’s syndicates.

All homeowners’ and renters’ policies, which start from $US35 ($46) and $US5 ($6.55) respectively, are sold via the Lemonade app and website.

“Technology drives everything at Lemonade,” President and co-founder Shai Wininger said.

“From signing up to submitting a claim, the entire experience is mobile, simple and remarkably fast. What used to take weeks or months now happens in minutes or seconds. It’s what you get when you replace brokers and paperwork with bots and machine learning.”

Peer-to-peer insurers are shaking up the traditional insurance model by treating premiums as belonging to the consumers who take out cover.

Customers, who are grouped according to their insurance needs, typically enjoy cash-back bonuses if they make no claims within a year.

“In a reversal of the traditional insurance model, Lemonade treats premiums as if they were still the property of the insured, returning unclaimed money during its annual ‘give-back’,” Lemonade says.

“Lemonade uses premiums from each grouping to pay the claims of those individuals, giving back leftover money to their common cause.”