The Company’s Annual Giveback, Where Underwriting Profits Go To Non-profits, Funded 14 Charities Chosen By Lemonade Policyholders
Press Release – July 11, 2017, New York: Lemonade, the insurance company powered by artificial intelligence and behavioral economics, announced it donated more than 10% of its revenue to nonprofits as part of its annual Giveback.
This year’s Giveback built a home for a family in El Salvador with ‘New Story’, rehabilitated water wells in Malawi with ‘charity:water’, delivered meals for elderly New Yorkers with ‘Citymeals on Wheels’, and stocked a childcare center for 6 months with ‘Women in Need’ (WIN). Ten other nonprofits, including the ACLU, the Robin Hood Foundation, and Teach For America also received a Lemonade Giveback.
In dollar terms, the 2017 Giveback was $53,174, amounting to 10.2% of the revenues Lemonade recognized since its September launch. Accounting rules mean that Lemonade’s rapid growth will only be recognized in next year’s revenues, holding the promise of an exponentially larger Giveback in years to come.
“Giveback this year amounts to 10% of our revenue, something our entire community can be very proud of,” said Daniel Schreiber, Lemonade CEO and cofounder. “While it’s early days, a point of comparison is the 0.08% of revenue that the Fortune 100 gave last year . So while we’re small, and the absolute numbers are modest, Giveback should scale as we do. Think what our industry could achieve if others adopted the Giveback way.”
In addition to digitizing the entire insurance process, Lemonade reduces costs and bureaucracy through giving. In a reversal of the traditional insurance model, Lemonade takes a flat 20% fee and treats premiums as belonging to the insured, not the insurer, returning unclaimed money during this annual Giveback.
When getting a Lemonade policy, customers are asked to choose a cause they care about. People choosing the same cause form a ‘virtual group’; Lemonade uses their premiums to pay their claims, and ‘Givesback’ any leftover money to their common cause.
“Giveback is like a social contract among our community, and the size and allocation of the Giveback is determined not by our big profits or big hearts, but by the good fortune and good behavior of our members,” said Prof. Dan Ariely, Chief Behavioral Officer of Lemonade. “As we see it, ‘it’s not our money’. It’s money our community has entrusted to us, first and foremost to help our members recover from unfortunate events in their lives, and secondly to help the less fortunate in our broader community.”
Giveback funds nonprofits, but benefits everyone. Fraud consumes as much as 38% of all the money in the traditional insurance system, inflating premiums and making the claims process protracted and unpleasant. While the industry shrugs this off as a cost of doing business, behavioral scientists have mapped the underlying drivers, providing Lemonade with a blueprint for building a new kind of insurance carrier. The solution is Giveback, derived from studies by Prof. Ariely, which earned Lemonade a B-Corp certification.
Lemonade Insurance Company is a licensed insurance carrier, offering homeowners and renters insurance powered by artificial intelligence and behavioral economics. By replacing brokers and bureaucracy with bots and machine learning, Lemonade aims for zero paperwork and instant everything. As a Certified B-Corp, where underwriting profits go to nonprofits, Lemonade is remaking insurance as a social good, rather than a necessary evil. Lemonade is currently available in New York, California, and Illinois, and licensed in seven more states, and looks to expand nationwide.
 CECP | Giving in Numbers, 2016 EDITION, page 36
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