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The Lemonade Story
In May of 2015, two entrepreneurs named Daniel Schreiber, the former President of Powermat, and Shai Wininger, the CEO and Founder of Fiverr, wanted to create a new type of insurance company. Based on cutting edge artificial intelligence and new theories of behavioral economics, this “new type of insurance company” would completely disrupt the current insurance industry.
The problem was that neither of them knew anything about insurance.
So, they needed an insurance expert with decades of experience but one that could think out of the box. They found Ty Sagalow and Innovation Insurance Group.
Backed by the largest seed investment in Israel’s history from VC powerhouse Sequoia Capital (the money behind Apple, Instragram, Paypal, among many others) along with Aleph, Lemonade was born, hoping to prove that when it comes to insurance, when “Life gives you Lemons, You Create Lemonade”, turning insurance from a necessary evil back to a social good.
Taking a new enterprise not associated with any existing insurance carrier from a concept on a white board to an actual licensed and functioning insurance carrier was no easy task. In fact, it had never been done.
As the newly chosen Chief Insurance Officer, Mr. Sagalow had to:
- Staff the company (underwriting, claims, finance, legal etc.)
- Find and execute the proper reinsurance
- Work the CTO (a co-founder) in making sure the technology used for underwriting, claims, back office administration etc worked from multiple perspectives
- Negotiate with insurance regulators all over the country and ultimately obtain licenses to operate throughout the country.
Each of these tasks had substantial challenges. For example, how do you find, and then convince, seasoned insurance professionals to leave their cozy traditional insurance companies and work for a startup? How do you convince reinsurers and additional investors to trust and join in the “lemonade experiment”? How do you convince insurance regulators to give a brand new insurance carrier a license to operate?
Yet it was all done.
In less than a year, Lemonade was staffed with seasoned insurance professionals, along with the the world’s top coders and technology professionals, obtained high quality reinsurance from the some of the best reinsurers in the world, obtained an A rating, and, most importantly, was provided a license to operate in its first state, New York, a state historically known to be among the toughest insurance regulators in the country.
Then came Illinois and California, and more than a dozen more states. One year after getting its license in New York, Lemonade was licensed in states representing more than half of the U.S. population. Operating now in New York, New Jersey, Illinois, Texas and California, Lemonade now adds 2,000+ new policyholders ever week to its homeowner’s insurance business. And, according to google, has captured more than 1% of the NY renters market in 9 months.
So Now What?
On July 1, 2017 with the job of going from “zero to one” firmly done, Ty Sagalow went back into the life he loved before Lemonade, consulting. Still on the board of Lemonade Insurance Company, Mr. Sagalow now helps other InsurTech companies, like Premonition, and traditional insurance companies, as well as technology companies seeking insurance partnerships achieve their growth goals.