Lemonade has made some big moves in the world of insurance.
The company uses AI and bots to sell insurance, and has flipped the business model to ensure that Lemonade is never in conflict with customers filing insurance claims.But the product itself, the actual insurance policy, hasnt changed much at all.
For decades, insurance companies have been held to long, tedious legalese in their insurance contracts.
In Lemonades case, the document is more than 40 pages long and incredibly difficult to understand.For a company that wants to make buying insurance as easy and as consumer-centric as possible, the very product they sell is in complete opposition to that.
Which is why Lemonade is re-writing the policy from scratch.Im a recovering attorney, and Ive been clean for 20 years, said Lemonade CEO and cofounder Daniel Schreiber.
I think my English is pretty good, and I have a passing familiarity with insurance and generally I cant understand this insurance policy.
To do the next big thing in insurance means changing insurance.
Its not been done in generations.
This is a historic document thats been optimized around lawyers.So Lemonade has re-written the whole thing to read like a blog post.
Policy 2.0, according to Schreiber, is meant to give consumers a clear and easy way to understand what is and what is not covered in their insurance policy.But, in a little bit of a twist, Lemonade is open-sourcing the policy on GitHub.
Anyone, from state regulators to consumer advocacy groups to Lemonade competitors or even interested customers can make edits and contributions to the policy.
Plus, Lemonade is opening up use of the policy to other insurance providers under the GNUs Free Documentation License.Part of this has to do with transparency to consumers, but another part is simply about Lemonades greater mission of making insurance simple.We sold you a policy on your phone, said Schreiber.
We want a policy that makes sense on a five-inch screen.I asked Schreiber whether or not there is any concern over rewriting a policy in more plain language when historically, lawyers use specific language to stay within the realms of legal precedent and remove any grey areas that may be litigated.Anytime you abandon language thats been litigated for years you invite legal uncertainty, answered Schreiber.
But we think if youre optimizing for the consumer, giving them clarity into exactly whats covered and exactly what isnt, you wont feel cheated if we cant cover things because youll see that you had that info all along, in plain English.One hurdle, however, will be regulators.
A good deal of the language in that 10,000 word-long insurance policy is legally required to be in the document.
This change from Lemonade requires the company to work with regulators to allow the new policy to be sold, and that conversation differs from state to state.Thats why Schreiber believes Policy 2.0 wont be available for purchase until sometime in 2019, rolling out on a statewide basis as is approved by regulators.That said, Schreiber said hes already in conversation with regulators and is seeing willingness to be flexible on this.When Policy 2.0 does come to the main stage, current Lemonade subscribers will be able to immediately change over to the new policy or keep their original policy.Lemonade has raised a total of $180 million, including a whopping $120 million round led by SoftBank from December.