We started the final day of our trek with a visit to Lemonade, an Israeli success story that is shaking up the future of the insurance market in the US and Europe. Lemonade fundamentally changes the insurance business model, through users donating a portion of their unused premium each year to a charity of their choice. In this way, insurance holders are more inclined to be honest about the value of their claims, and the underwriter (Lemonade) has less incentive to not pay out claims (as the unused premium will not improve their bottom line).  

It was impressive to see the thoughtful way in which the company had targeted its offering towards a particular customer segment – millennials. The platform is paperless and draws on AI to customize its offerings to the individual customer. Policies are written in simple, concise words – designed for customers, and not for lawyers.  

The team at Lemonade showed us some important lessons. We learned that it was possible to create a profitable business with better aligned incentives while benefiting society (which nicely relates to INSEAD’s motto of using “Business as a force for good”). We saw the advantage that new entrants have in terms of agility – it is very hard for a traditional, cumbersome insurance company to develop an advanced tech platform on par with Lemonade, because digital integration is so hard. And finally, the power of harnessing technology – Lemonade automates wherever it can, leaving its most critical, complex functions for humans to execute.