Insurance is something people need but don’t always want to pay for. That’s especially true for millennials who are now the largest generation in America according to the Pew Foundation. As Gen Y’s begin to buy homes, drive cars and get married, they need insurance but aren’t covered to nearly to the same extent as older generations and many are opting out of insurance altogether.
Adults ages 19 to 34 have the highest uninsured rates of any American age demographic, according to the United States Census Bureau 2019 American Community Survey. Partly this is because the high cost of living and uncertainty about employment are causing many people in this generation to move back home after college. Beyond that, as Gary Drenik described in a Forbes article titled, Millennials Are In Their Prime Spending Years: What Insurers Need To Know, traditional insurance industry methods of attracting customers aren’t resonating with this generation.
Against the odds, a New York based company called Lemonade has found a way to attract younger insurance customers. Founded in 2015, Lemonade is a publicly traded company that’s also a B Corp with a mission be the most loved insurance on the planet. A key to their success is a program called Giveback where each year the company and its customers donate leftover money to causes their community cares about. I spoke with Nina Rauch, Lemonade’s Head of Social Impact to find out more about how the company winning over Millennials and Gen Zs by engaging them in social change.
As a younger person with a background in social change, what led you to work at an insurance company?
If you had told me 10 years ago that I would be working in insurance, I would have been very surprised! After my mother died of breast cancer when I was 15, I found that the large breast cancer charities targeted women who are over 30 to attend galas and dinner parties and that didn’t appeal to me. Then I realized that a whole generation of people who could potentially turn into large donors is being ignored by these large charities. So I founded my own organization and we raised almost half a million dollars from people aged 18 to 21. That experience got me thinking about the idea of Gen Z giving, and how charities need to reconfigure who they see as their target market. I did global development in University then worked for an environmental charity because I wanted to create change. Then I discovered Lemonade and the B Corp model. I didn’t know anything about insurance but I loved their give back model and focus on younger consumers.
How is Lemonade engaging people who are so resistant to purchasing insurance?
As a conscious consumer, I want to be very careful about where I’m putting my money. What really drew me to Lemonade was the fact that they know that people need insurance and that they also want to make the world a better place. For example, insurers have around 450 billion invested in fossil fuel but Lemonade will never invest in the fossil fuel industry. We also engage younger consumers through Giveback where we donate up to 40% of unclaimed premiums to charity. As soon as someone purchases a policy they are given a choice of charities that can benefit from their unclaimed premiums. This is actually money that most insurance companies keep as profit but we feel that money doesn’t belong to us. Giveback customers are part of a community that is helping others while covering their own valuables, insuring their home, or making sure their pet can afford vital medical care.
How has donating unclaimed premiums to charity impacting the company’s bottom line?
Our customer growth has been faster than all the largest insurance companies. We have reached nearly two million customers in five or six years where competitors have taken up to 40 years to have similar growth. It’s been really interesting for me personally to work for a company that recently went public because I saw how the social impact work that I was doing also resonated with investors because it was helping to attract new customers. At Lemonade, we believe in the power of Gen Z. It’s my personal experience that this is a demographic that is not prioritized but shouldn’t be underestimated. If companies engage them in the right way at the beginning of their careers that can be translated into long term loyalty. We have customers telling us all the time how much they love Lemonade, which is strange to hear about an insurance company.
How does Lemonade communicate its social impact?
Every year I contact each of the charities that receive money and let them know exactly what dollar amount they are getting. Then I follow up to find out exactly how that money is being used in order to verify the impact for our customers. Afterwards we sit down as a company and make sure that these charities and their actions are answering our customers’ common areas of concern, like environmentalism for example, to make sure that we’re putting our money where our mouth is. We send out around two million emails so each customer knows their individual impact, which is really cool. So, if you chose the Red Cross, you get a beautifully designed package saying something like ‘this year you donated $97,000 to the Red Cross, which funded sickle cell research for 2000 people’ and you’ll be able to see the full impact.
What kinds of feedback are you receiving regarding Lemonade’s model?
I have emails from customers saying, ‘I’m so grateful to see that you donate to the Trevor Project. This is a cause that’s really close to my heart.’ So you feel this direct engagement with your customers which is unique and every time we expand into a new country we bring new causes onboard. I think you can tell so much about a person by what cause they choose to support. If a customer has chosen an environmental organization to support, I’m immediately aware of their priorities. This is intelligence that other companies don’t have and it allows me to communicate with them so much more clearly than other companies which I see as a clear business advantage.
I think there’s a lot to learn from a company that has found a way to sell insurance to young people. There’s also a reason for executives to pay attention to people like Nina who are cracking the code on how to engage the next generation of conscious consumers.
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