New York-based insurtech company founded in 2016, Lemonade, traded publicly for the first time on Thursday. Shares increased 139% in a single day, making Lemonade one of the best-performing IPOS of 2020 so far.
So what’s the big deal with Lemonade?
We’ve talked about them on the blog before, and we’ve come to the conclusion that their success can be attributed to their ability to give millennials what they want. Millennials are notoriously unloyal, so winning their loyalty is a big deal. Their fun, pink branding is just a bonus on top of the simplicity that their AI-powered platform brings to a usually frustrating process: buying insurance and filing claims.
In their words, here’s what they do differently than other insurance providers:
Lemonade Insurance Company is a property and casualty insurance company that is transforming the very business model of insurance. By injecting technology and transparency into an industry that often lacks both, we’re creating an insurance experience that is fast, affordable, and hassle free. Unlike any other insurance company, we gain nothing by delaying or denying claims (we take a flat fee!), so we handle and pay as many claims instantly as possible.
Millennials also love supporting companies that do good. Lemonade donates any unused claims reserves to charity. This benefits charities and eliminates the possibility of Lemonade profiting off of pushing off claims.
Clearly, in the fact that the valuation is so high, people are seeing the benefit of being so simple and customer-centric. But some people are skeptical, like consultant Hugh Tallents. He claims that, “ultimately, Lemonade is just another AI-backed, unprofitable fintech company with no real product or value proposition advantage.” Hmm.
Lemonade CEO Daniel Schreiber isn’t going to let the huge valuation give him a big head, though: “We’ve got many years ahead of us…I’m not going to pay any attention to short-term fluctuations — even exciting ones like this morning.” A pretty smart move to ensure longevity.
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Hannah Michelle Lambert is the Social Media + Events Coordinator at Worthix, as well as the host of the monthly CX News Recap segment. She is a graduate of the University of Michigan.