Recently, innovation-focused startup insurers Lemonade and Haven Life both announced expansion beyond their initial states–Lemonade to all but 3 states and Haven Life adding five states and D.C., leaving only California and Montana to add. Both initially launched in limited states (33 for Haven and just New York for Lemonade). Add to this the announcement this week that Ladder has launched in its first market, California. The limited launch approach allows these companies to gather customer data and make the necessary process changes that will be critical to their data-driven approaches going forward.
As these insurance startups build their policy counts, more customer data will be accumulated that will provide better algorithm results. But, scaling up in size will offer different challenges for these “Creative Carriers”. Lemonade faces a transition of showing profitability while continuing to innovate, and Haven Life, backed by Mass Mutual, may face different pressures as they grow. In both cases, customers will continue to expect these startups to continue being innovative in how they approach customer experience.
Lemonade’s approach is centered on transparency to build trust. According to this recent blog post, they intend to soon release information on performance metrics and the impact of their ‘Giveback’ program (in which the company donates leftover money form premiums to causes customers choose). This is consistent with their focus on changing the industry by changing the dynamics of interaction based on behavioral economics principles infused in the organization by Chief Behavioral Officer Dan Ariely.
Haven Life on the other hand stays focused on creating the simplest and fastest possible experience–what they refer to as their “ridiculously easy process” for buying life insurance. Their value proposition also includes transparency, but more by providing a fast quote and enabling easy comparison price shopping.
With their expansion into new state markets, the continuing growth and adjustments at both of these innovators will be important for incumbent insurers and imitators to watch throughout 2017.