Mobile app-based renters’ insurance with ‘Giveback’ model now available in Arkansas

The mobile app-based rental and home owners’ insurance carrier Lemonade of New York City can now do business in Arkansas, according to a statement from Arkansas Insurance Commissioner Allen Kerr.

“The Arkansas Insurance Department is happy to welcome its first insurtech company to Arkansas,” Kerr said in the statement. “Lemonade is a company focused on using technology, artificial intelligence and bots to innovate the insurance industry while promoting nonprofit giving through its annual ‘Giveback’ program of underwriting profits. I am proud to welcome Lemonade to the renters’ market in Arkansas.”

Lemonade offers rental insurance from $5 and homeowners’ insurance starting at $25, according to its website. However, Kerr granted authority to Lemonade to sell property, casualty and marine products in Arkansas with an initial limit to renters’ insurance.

“Lemonade’s business model uses artificial intelligence and behavioral economics to communicate through a mobile platform with its customers,” according to a press release from the commissioner’s office.

The interface features an artificial intelligence bot named Maya, which guides users through the process of buying insurance and also through the claims process, allowing users to get paid without human intervention. The website advertises individuals can get insured in 90 seconds and get paid in 3 minutes.

Gail Blucker, executive director of the Landlords Association of Arkansas in North Little Rock, said she had not heard of Lemonade or the commissioner’s announcement to allow the first insurtech company to do business in Arkansas. However, she said in general she welcomes moves that encourage more tenants to get insurance.

“I think more landlords should require them to have renters’ insurance,” Buckler said. “Renters seem to have more valuables in terms of computers, televisions and phones, and it protects them.”

Lemonade also returns unclaimed money each year to nonprofit organizations of users’ choice. Customers choose a charity to which they would like to contribute, then all customers who chose that charity pay into the same pool. Throughout the year claims are paid out of this pool, and any money left at the end of the year is donated to the charity.

Lemonade receives a flat fee of 20% from premiums up front and does not keep any leftover money, according to the company.

Lemonade is a certified B-Corp now doing business in New York, California, Ohio, Nevada, Rhode Island, Texas, New Jersey and Illinois, according to its website. It was founded in 2016. The company raised $120 million in a recent funding round announced Tuesday (Dec. 19). Prior to that, it raised $60 million, according to Bloomberg.

Ryan James, Arkansas Insurance Department communications director, said the department’s main concern with allowing a nontraditional insurance company was its ability to pay claims.

“The finance division was able to determine that it had sufficient capital to pay claims. “They’ve demonstrated they have the financial wherewithal to do business here in Arkansas.

“We’re always looking for unique and innovative companies. The welcome mat is out there here in Arkansas,” he added. “The more companies able to offer more products will lead to better choices, and hopefully ultimately lower premiums for Arkansas policyholders.”

This is the 28th new company Kerr has granted authority to in 2017. Since becoming commissioner in January 2015, Kerr has welcomed 63 new companies to Arkansas. Though Lemonade is now authorized to do business in Arkansas, the app does not yet allow Arkansas users. James said the timing of that would be up to the company. Lemonade representatives were not immediately available for comment.