“Behavior is phenomenally important [in insurance],” said Dan Schreiber, CEO of Sequoia-backed insurance startup Lemonade, on stage at CB Insights’ Future of Fintech Conference.
According to Schreiber, “There’s a reservoir of ill will towards insurance” and Americans by and large see it as “a necessary evil instead of a social good.” This leads to survey results like “25% of Americans…[saying] it’s okay to defraud insurance company.”
“The other 75%,” Schreiber said, “were brought up better than to admit that sort of thing to strangers.”
So what’s the answer? Create models to drive better human behavior around insurance, Schreiber suggested. The current system, wherein customers distrust the system, leads them to try to cheat it at every turn because they expect that the system is actively trying to do the same to them. This adds cost and complexity to the system.
Technology, he said, is just part of the solution. Despite the obsessive focus on FICO scores and claims assessors and all the trappings of the modern insurance and lending industries, there’s a 38% loss rate in insurance because of fraud.
But this doesn’t have to be the story with insurance in the modern age. With increased trust, Schreiber said, a better system “[is] doable.”
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