Fintech insurance company Lemonade announced today the 14 charities who will benefit from the company’s annual Giveback program. Powered by a combination of artificial intelligence and behavioral economics, Lemonade donated $53,174, which amounts to 10.2 per cent of revenue.
The recipients include New Story, which built a home for a family in El Salvador, charity:water, who rehabilitated water wells in Malawi, New York City’s meal delivery service for seniors Citymeals on Wheels, and Women in Need, whose childcare center was stocked with six months of supplies. The ACLU, Robin Hood Foundation and Teach for America were among the other recipients.
“Giveback this year amounts to 10 per cent of our revenue, something our entire community can be very proud of,” Lemonade cofounder and CEO Daniel Schreiber said. “While it’s early days, a point of comparison is the 0.08 per cent of revenue that the Fortune 100 gave last year. So while we’re small, and the absolute numbers are modest, Giveback should scale as we do. Think what our industry could achieve if others adopted the Giveback way.”
Giveback funds are generated when Lemonade donates unclaimed money from virtual groups who choose the same cause to receive leftover money once all claims within that group are paid in a year. When policy holders join Lemonade they pay a flat 20 per cent fee and select their charitable cause.
“Giveback is like a social contract among our community, and the size and allocation of the Giveback is determined not by our big profits or big hearts, but by the good fortune and good behavior of our members,” Prof. Dan Ariely, Lemonade chief behavioral officer said. “As we see it, ‘it’s not our money’. It’s money our community has entrusted to us, first and foremost to help our members recover from unfortunate events in their lives, and secondly to help the less fortunate in our broader community.”
In a release Lemonade said fraud accounts for as much as 38 per cent of all money in the traditional insurance system. Behavioral scientists have identified the underlying drivers, with Lemonade’s business plan based on those drivers.