Did you hear about the huge insurance company that tried to squash the insurance startup? It’s a classic “triumph of the underdog” moment. In October 2018, insurance giant State Farm released an ad that attempted to minimize the strides of InsurTech disrupter Lemonade – only to find that Lemonade could override the effort in a surprising twist.

In case you missed it: State Farm ran an ad that mocked the use of artificial intelligence (AI) – in particular, chatbots – in insurance companies. Lemonade, which uses chatbots to fuel its fast claims processing service, was quick to respond. Shai Winiger, co-founder and CTO of the Israeli startup, focused on State Farm’s defensiveness. Winiger ran a campaign paying to promote State Farm’s ads, because “we think it reveals far more about State Farm than it does about Lemonade.”

It was an inspired move. It increased social media buzz to record levels, and brought an invitation for an online debate between Lemonade and State Farm about how quickly AI should be integrated into insurance customer service.  

Why InsurTech is a vital breath of fresh air

The marketing faceoff between State Farm and Lemonade was just the tip of the iceberg. It’s worth noting here how successful Lemonade is proving. In an industry where it has usually taken over 100 years, on average, to become a “top ten” company by market share, Lemonade has achieved that rank in only a few months.

Lemonade is one of a handful of InsurTech startups that are challenging the traditional insurance companies. Traditional insurance companies are among the most hated companies, only slightly more popular than tobacco companies and giant oil firms, according to a Harris poll. Despite the last few years of innovative technological advances, in which fintech has made its mark on almost every aspect of financial services, insurance companies have shown very little effort to use these innovations to resolve customer pain points.

As a subsector of fintech, InsurTech uses new, connected, data-driven ways to think about insurance, spanning behavioral analytics, Internet of Things (IoT), AI, micro-insurance, and peer to peer financing (P2P). McKinsey identifies eight core technologies that have been ignored by traditional insurers, but form the core of startups disrupting the industry: big data; usage-based insurance; IoT; gamification; roboadvisory; P2P; blockchain; and micro-insurance.

Through their use of these transformative technologies, InsurTech startups are delivering an improved customer experience that is fast, responsive, and easy to access – and beneficial for both company and customer. Lemonade CEO Daniel Schreiber says in Forbes, “We never want to make money by denying claims… We want to build a model that doesn’t have conflict of interest at its core.” Instead of completing long and complex application forms, InsurTech companies use AI and big data to mine all the information they need from the minimal amount of customer-inputted data. This means that potential customers can share nothing more than their name and address in order to get a tailored, accurate insurance quote.

How InsurTech is curing insurance’s pain points

One of the many customer pain points has been the complaint that insurance companies have a vested interest in denying claims. InsurTech startups – including Lemonade – combat that by using big data and improved UX, to display transparency and trustworthiness.

In a world where gamification rules, InsurTech has stepped in to combine IoT with gamification and usage-based insurance. For example, health insurance premiums can be lowered when members increase their daily exercise, as tracked by a Fitbit or similar app. Car insurance costs can be reduced when customers install a telematics device in their car. Lemonade, and our next InsurTech startup yulife (see below for more), use the intersection of these technologies, underpinned by big data and machine learning, to produce customized insurance premiums which make each customer feel like an individual.

By leveraging AI algorithms, machine learning, and connected devices, InsurTech companies have also cured another major insurance pain point – the amount of time it takes for insurance companies to respond to claims. Traditional insurance companies are bound to a human-only customer service model, which is inherently limited in the speed at which it processes claims. The only way to speed up claims processing is to add more trained and experienced customer service agents, which is not as easy as it sounds.

InsurTech startups replace human agents with AI-powered chatbots which are able to deal directly with a large number of claims. Only complex claims, which cannot be resolved by a chatbot, are forwarded to a human representative. Although this was the target of State Farm’s mocking ad, it seems likely that many insurance customers aren’t interested in the compassionate emotional response that only a human can provide – they just want their claim to be recorded and dealt with as fast as possible.

The rise of InsurTech startups

Lemonade is the best known InsurTech company and a tech unicorn, but it’s not the only disruptive InsurTech startup. The Israeli fintech landscape has sprouted other companies producing solutions for slightly different pain points in the insurance industry. North America, the UK, and other fintech world hubs are also giving birth to their own InsurTech startups.


Along with Lemonade, the InsurTech startup that has us all excited is yulife, a UK-based company with a similar model to Lemonade, albeit in the realm of life insurance instead of renters’ and homeowners’ insurance. yulife launched in November 2018 and is planning to shake up the insurance industry with a different spin. It’s powered by behavioral science and AI to provide better, lower-cost life insurance that focuses on encouraging customers to live better lives.

yulife centers around the Yucoin, a platform-based virtual currency that customers can earn through taking small steps to improve their quality of life. Acts like walking to work, meditating, and taking other steps towards a healthier life earn Yucoins. Yucoins can be cashed in for rewards, such as Avios points, Asos vouchers, and passes for NowTV. yulife was inspired by the philosophy of Dr. Rangan Chatterjee, who serves as Chief Wellbeing Officer for yulife.

yulife maximizes customers’ competitive streak by gamifying life insurance into a quest towards greater wellbeing that plays out across company leaderboards. In this way, yulife aims to create lasting and positive lifestyle changes.  

Planck Re

Another Israeli InsurTech startup, Planck Re, is entering the U.S. commercial insurance market to offer insurance companies improved insight into customer risk assessment. Planck Re uses AI capabilities, including big data mining and machine learning, to automate commercial insurance underwriting.


An additional InsurTech startup to come out of Israel is LeO, wielding AI and big data mining to provide a more informed insurance buying experience for customers, and a more intelligent insurance selling experience for brokers. It offers white label AI services to insurance companies and brokers to help them automate customer service. Through LeO, insurers and insurance agents can gather and analyze customer data and use it to power automated conversations to sell and renew insurance policies. LeO also provides an online platform for condominium owners and tenants to buy customized home insurance.


Hippo is an American InsurTech startup in the realm of homeowners’ insurance. It offers a more streamlined and faster signup process using advanced AI algorithms and big data analysis to cut the time it takes to get an insurance quote. By connecting with IoT, Hippo offers free sensors to detect water leaks earlier. However, Hippo still requires customers to call a telephone hotline and speak to a customer service agent to process a claim.


U.S. InsurTech startup Jetty offers wraparound renters insurance that includes co-signing leases and guaranteeing rent and security deposits. It uses big data, machine learning, and advanced algorithms to deliver personalized quotes in just a couple of minutes. Jetty is a comprehensive InsurTech package that currently focuses only on renters’ needs.

Backing InsurTech… into the future

OurCrowd is proud to be one of the VC backers of both yulife and Lemonade. We believe that InsurTech is going to transform the insurance industry as completely as fintech is doing to the general financial services industry. yulife and Lemonade herald the change in the insurance community, from a top-down, reactive, and opaque model to one that is user-focused, responsive, and transparent.

Instead of building a mission rooted in solely the company’s bottom line, both Lemonade and yulife focus on building technology that pushes what the customers need for a constructive experience. Both startups incorporate ways that make insurance attractive to the average millennial, including an easy to use app, appealing interface, enticing benefits for customers, and modern, responsive UX which drags insurance into the twenty-first century.

You’re going to be hearing a lot more from InsurTech startups over the next few years, so keep watch of what’s next.