Each week it seems, we hear about another self serving startup. They aren’t necessarily trying to fix something that’s broken. In many instances, they are simply coming up with a clever, faster and more convenient way to do something which has no social impact. I can shop for my own groceries – thanks but no thanks, Instacart.
There are, however, startups that are mission driven. They prove it is possible to be profitable while doing social good. The first company I thought of was Lemonade. They provide a service we all need, while providing for those in need. What could be better than that?
Lemonade was founded with a rather simple premise: The insurance game is needlessly broken, and there is a way to fix it, while also doing social good. First, let’s look at traditional homeowner’s insurance. You pay a sizable fee to protect your house and your belongings from damage. When/if that damage occurs, you submit a claim to the insurance company, only to be told your damages are not covered. We’ve all been down that road. At the end of the day, standard insurance companies make money by saying “no”. This leads to distrust and exaggerated claims by policy holders – all in the hopes of collecting a payout. At the end of the day, the policy holder and insurance company are both fighting over the same dollar. It’s self perpetuating, antiquated system that only serves to make the insurance companies wealthier, while not adequately covering its policy holders.
Lemonade works differently. They take a small, flat monthly fee up front, the rest goes to covering your belongings. No brokers are involved, and everything is handled through their convenient, easy to use app. At the end of each year, the leftover money that hasn’t been used to pay claims is distributed to causes that matter to you. Lemonade reverses the traditional insurance model by treating the premiums you pay as if it’s your money, not theirs. By doing so, Lemonade is protecting homeowners and strengthening communities at the same time. Lemonade is a Public Benefit Corporation and certified B-Corp. Social impact is part of their legal mission and business model.
Now they just need to figure out how to apply the same model to health insurance…