Lemonade’s Bizarre New Approach

In its latest effort at self-promotion, industry “disrupter” Lemonade has posted an article on multiple web sites. Here is the article from one source: “Lemonade: World’s First Live Policy” Below are some excerpts from the article and some observations and questions of my own. “Then, customers would need to pay for some changes, and probably get a new policy sent to them in the mail (snail mail, of course). That’s where the red tape and long wait times come in….” So, the changes listed in the article that Lemonade will allow their insureds to make without customer service assistance wouldn’t in some cases result in additional premium? And what carrier mails an entirely new policy for changes as described in the article? This is nonsense, and it is not an accurate nor an honest statement. “As far as we know, no other insurance company allows its customers to modify their coverages or even cancel their policy on their own.” This is disputed in one comment at the bottom of the article linked above. More important, if anyone actually CARES about the customer, why would they want to facilitate an untrained person to make a change that, unbeknownst to them, could create a serious exposure gap? So, Lemonade would allow, with no questions asked and no intervention by customer service, one spouse to remove another spouse even if both are named insureds on an insurance CONTRACT? The insured, without question or counsel, can remove a landlord as an additional insured on a policy even if the lease contractually requires the landlord to be covered? How many insureds read their leases or insurance policies? How many would know the potential liability they’re incurring? Do the people at Lemonade understand this? This is why knowledgeable insurance agents serve a purpose. Most insurance agents are required by law to pass examinations and engage in state-approved continuing education to provide counsel to consumers for these types of decisions. How is a consumer who knows pretty much nothing about insurance supposed to make coverage decisions on her own without the training that state regulators require of agents? What do regulators think about this practice? “Even if you buy renters insurance directly from the likes of GEICO or Progressive, the only part that’s direct is taking your money and sending you a policy. Everything else requires customers to contact customer service — which we all know can be… painful. That sucks.” What can be far more painful is the inability of an uneducated, ill-informed and unsuspecting consumer to contact customer service to obtain the counsel and advice of a properly trained and knowledgeable insurance agent. See also: Lemonade’s Crazy Market Share   It sounds like Lemonade is adopting a practice that saves THEM a lot of time and lessens THEIR need to hire competent insurance advisers and SELLING it as a benefit to consumers. In other words, Lemonade is reducing its workload, increasing consumers’ risks of loss and making customers thank the company for it. On top of that, because Lemonade is not intervening in the insured’s own bad judgment, is the company also insulating itself from E&O claims such that customers will have no coverage under either their own policy or Lemonade’s E&O coverage? Who is the real beneficiary here? I think most insurance professionals can answer that question. Caveat emptor.