Lemonade, the startup peer-to-peer insurance carrier that has raised $13 million in initial funding, announced a line-up of global reinsurance partners, including Berkshire Hathaway and leading Lloyd’s of London syndicates.
Lemonade set records with its initial funding by Sequoia and Aleph, followed by its announcement that four senior insurance executives from ACE and American International Group (AIG) had joined its ranks.
Daniel Schreiber, CEO and co-founder of the P2P insurer, said that with Berkshire Hathaway’s National Indemnity and Lloyd’s of London backing Lemonade, the stage is now set for Lemonade’s consumer launch in the coming months.
“For insurance to provide true peace of mind you want to know your insurer is both willing and able to pay your claims,” said Schreiber. “Lemonade is the only insurer that doesn’t make money by denying claims – so no one is more willing than us. With the backing of the world’s foremost reinsurance names, no one is more able either.”
In addition to Berkshire Hathaway’s National Indemnity, the P2P insurer said its reinsurance line-up includes Everest, Hiscox, Munich, Transatlantic and XL Catlin.
“We’re proud to support Lemonade’s creation of a fast, simple, and consumer driven insurance platform,” said Mike McGavick, CEO of XL Catlin. “Consumer trust in the insurance system is at the heart of the insurance business, and is essential to the success of any new venture. With this collection of leading reinsurers, Lemonade’s customers will know this innovative venture is backed by some of the best and most established in the industry.”
Lemonade’s founders promise their firm’s technology and approach will reinvent the insurance industry business model and make insurance a “delightful” experience for consumers.
“Most Americans view insurance as a necessary evil rather than a social good, and that’s something we’d like to change,” Schreiber said in December when he annuunced the capital raising.
Lemonade will not be the first P2P insurance venture. Germany has friendsurance (founded in 2010), the United Kingdom has Guevara, and China has TongJuBao. It’s not now known in what ways Lemonade will compare to other P2P insurance ventures, although some act as brokers, not carriers.
Typically P2P sites invite users to form small groups of policyholders who pay premiums into a pool to pay claims. If there is money left in the pool at the end of the policy period, the members get money back.
The New York-based Lemonade last month named Ty Sagalow, a 25-year senior executive with AIG, as its chief insurance officer. The New York-based startup has also attracted three other seasoned insurance executives — Robert Giurlando and James Hageman from ACE Insurance and Ron Topping, also from AIG — to join its small band of technologists.
Lemonade is part of a surge in insurance tech startup funding that reached $2.65 billion in 2015, up from $740 million in 2014, according to CB Insights Venture Capital database. Funding for instech jumped 45 percent in the fourth quarter of last year, CN Insights reported. Among those receiving funding in 2015 in addition to Lemonade were PolicyGenius ($15 million), Zenefits ($500 million) and China’s Zhong An ($930 million).
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