How Lemonade is Taking the Use of Inspection Technology to a New Level

There’s a new player in the property and casualty insurance arena that is quickly gaining traction with the younger tech-savvy generation. Lemonade, an artificial intelligence focused-insuretech company that offers renters and homeowners insurance, is gaining new customers that are ditching their “old insurance companies” on a daily basis.

The appeal of Lemonade is that it provides instant solutions. Upon downloading the Lemonade app, prospective customers can be insured within 90 seconds. Also, when it comes to getting claims paid, it only takes a minute to submit a claim using the app and get paid. Lemonade is capitalizing on meeting the need for instant gratification and is making a lot of noise in the industry as a result.

Lemonade is an example of a company that is embracing big data to underwrite risk. To provide an insurance solution, a customer simply needs to use the app to submit his address, swipe through a few risk-based questions (fire alarm, burglar alarm, etc), and he’s insured. This underwriting model would not work well for underwriting all property types as the lack of thoroughness creates a lot of exposure for insurance carriers. However, Lemonade is choosing to focus on a market that it knows well–urban dwellers–to provide its services to.

As un-thorough as it may be, the smartphone app is Lemonade’s form of inspection technology. However, we’re seeing a lot of insurance carriers choose to use innovative inspection technology to strengthen their underwriting processes. For example, some insurance carriers are testing the use of drones to perform property inspections. Others are embracing smart home technology to gain valuable insight into actual ways that homeowners are protecting their homes.

The benefits of inspection technology are undeniable. However, it’s important that insurance carriers don’t replace the value of an in-person property inspection with technology and big data. Instead, a combination of a physical property inspection and the use of inspection technology will allow insurance carriers to more diligently underwrite risk and protect their bottom line.

Lemonade is still very new to the market and is only available to renters and homeowners residing in a few states. It will be interesting to see how the limited information that the insured provides impacts the company’s profitability. Only time will tell if this will be a sustainable business model.

Our team of seasoned professionals at Insurance Risk Services has been providing insurance carriers with accurate underwrite support for more than 35 years. We’ve seen how technology has made its way into the industry over the past few decades and have embraced it ourselves to best help our insurance carrier partners to make informed decisions. Please contact us to learn how we can help you to put your best foot forward and protect your bottom line.