Lemonade App

The Lemonade app is a new way of insuring.

The company disclosed that it raised $34 million in new venture funding to assist in broadening its operations.  General Catalyst led the round with assistance from GV (formerly Google Ventures), Thrive Capital and Tusk Ventures.

This funding was in addition to $13 million in seed funding from Sequoia and Aleph.

This app is not only involved in the insuring of autos and household goods but is committed to social good. It is part of their business model.

Insurers should fear geeks alert to insurers’ business inefficiencies.

Daniel Schreiber and Shai Wininger, the founders of Lemonade, do not come from an insurance background. They realised that the industry is worth $4.6 trillion in global premiums.

These two guys regarded the current state of the insurance industry as frustrating and outdated.  Insurance is one of the least trusted sectors of the economy.  It ranks very low in customer satisfaction.

The insurance industry has a poor reputation for trust and customer service with its complex rules, fine print and lengthy processes.

The New York based start-up hired Dan Ariely as its chief behavioural officer.  Ariely is a professor of psychology and behavioural economics at Duke University.

In the first 48 hours after it opened for business in New York, Lemonade reported that it sold 142 policies.

They generated $14, 300 in gross written premiums.

Lemonade takes a flat fee for insurance and gives back money to causes which policy holders care about.

Shai Wininger believes that behavioral economics  together with Lemonade’s unique technology will decrease fraud.  It will also get rid of bureacracy and lower costs for its clients.

Lemonade employs 30 people and uses algorithms to process claims. The company says they can make decisions quicker than regular insurance companies. This can furthermore be done at a lower cost. The have a bot called Maya instead of brokers and an app instead of paperwork. Insurance can be done in seconds. Claims can be made in minutes. They set the world record for a claim paid in just 3 seconds.

The site has a feature which is called “switching”.  It allows users to cancel other policies they may have, receive a refund and purchase a new policy from Lemonade with a click of a button.  New customers came from State Farm, AllState, GEICO and Liberty Mutual.

When you sign up with Lemonade you are asked to pick a charity. At the end of each year, if you and other supporters of the same cause don’t make too many claims, then a portion of the money you have paid is then passed on to the chosen non-profit.

Last year a customer made a claim for a stolen coat. He answered a few questions on the app and recorded a report on his iPhone. 3 Seconds later his claim was paid. In these 3 seconds “A. I. Jim” the firm’s claim bot reviewed the claim, cross-checked it with the policy, ran 18 anti-fraud algorithms, approved it, sent payment instructions to the bank and hence informed the client.

Studies of EY or Accenture show that clients do not trust their insurance companies to pay claims. A new product such as Lemonade could cause customers to switch in large numbers to a product that they can trust.

The disruptive possibilities of Lemonade lies in their beautiful user interfaces, artificial intelligence and use of big data.

Unmanned Cargo Ships

The thought of unmanned cargo ships sounds like a ghost story. Wrong! This is actually the future of shipping.

Rolls Royce is working with groups backed by governments across northern Europe. Rolls Royce aims to launch crewless ships by 2020.

Sea transport costs could thus be cut by about 20%.

Major shipping firms are expected to adopt this technology hoping that it will boost profits.

The U. S. Coast Guard estimated that human error is responsible for about 96 percent of all marine casualties. Piracy is a reality so crews remain vulnerable. Furthermore there is a shortage of skilled workers who want a career at sea.

44 per cent of a ship’s costs is made up of carrying sailors. This includes not only salaries but crews’ quarters and air-conditioning units. Other amenities take up space which could be used for cargo.

25 per cent of greenhouse gas emissions are a result of maritime shipping. Rolls Royce predicts that unmanned cargo ships will be 5 per cent lighter and burn 15 per cent less fuel.

Unmanned cargo ships will therefore present challenges for insurers. They will have to consider new types of risks. The demand for guards protecting ships from piracy will be reduced. This is an industry that has been booming in the last few years. However, there would be a need for increased cyber security insurance.

Marine insurers have approximately 5 years to work out the costs of covering unmanned cargo  ships for risks that can occur at sea. Without historical data to fall back on will complicate the process of underwriting the risks of unmanned ships.

A drone vessel that is being operated remotely from onshore will create unique challenges. These threats include pirates, a fire at sea and the time it takes to reach a ship if a computer malfunctions. There would n’t be anyone if there was a breakdown. Help for a ship in the Atlantic could be done in one week, but in the Pacific that would take a three week voyage.

Fracking – Pros and Cons

Hydraulic fracturing or “fracking” has caused strife across the United States.  For some it promises increased energy independence.  For others, it means environmental catastrophe.

Fracking means drilling down several thousand feet into a rock formation that holds natural gas.  This rock is then cracked.  Pathways are created for gas to flow out of the well.  Natural gas and wastewater result from this exercise.  There are however a number of wastewater disposal methods.  The water is put into a lined pond. It then evaporates.   It can also be treated or injected underground. 

Opponents to fracking argue that the environmental impacts of fracking includes the risks of infecting ground water.   Earthquakes could be triggered. Fracking causes noise pollution as well as surface pollution.  There are furthermore the hazards to public health and the environment. 

Fracking requires an enormous amount of water – as much as 5 million gallons per well. Needless to say it requires numerous toxic chemicals.   About 25 percent of fracking chemicals could cause cancer.   Evidence is mounting throughout the country that these chemicals are making their way into drinking water.

Water quality can also be threatened by methane contamination.  This problem has been highlighted by footage of people in fracked areas accidentally setting fire to methane-laced water from kitchen faucets.

People are exposed to harm from lead and arsenic. This is brought back to the surface of the land with fracking flowback fluid.  In fact, fracking waste water is so dangerous that it can’t be reused for other purposes.

Fracking can release dangerous petroleum hydrocarbons.   It can also increase ground-level ozone.  This is a key risk factor for asthma and other respiratory illness.  The pollutants in fracking water and flowback fluid can enter our air. This happens when waste water is dumped into pits and then evaporates.

Today’s fracking techniques pose new dangers.  Directional drilling is a new technique that has greatly expanded access to rock formations.  Companies also employ high fluid volumes to fill horizontal “well bores”.  These sometimes extend for miles.  Oil and gas producers are using new chemical concoctions called “slick water”.  This allows injection fluid to flow rapidly enough to generate the high pressure needed to break rock apart.

Scientists believe a recent upsurge in earthquake activity is related to fracking.  The United States Geological Survey has linked fracking wastewater injection to a 5.6 magnitude earthquake in Oklahoma, which is seismically stable. 

Earthquakes are not the only possible consequences of fracking.  350.org, an environmental advocacy group said that some people have had difficulty staying in their homes because of methane buildup related to fracking.  Not only is it difficult to get homeowner’s insurance for properties with or near a gas well, it is also difficult to get a mortgage. 

The Insurance Information Institute stated that all homeowner’s insurance policies exclude damage from environmental contamination.  Homeowners with an earthquake endorsement can get coverage for earthquake damage, even if the quake is linked to fracking.  For people who have leased their land which in effect makes it a business, insurance is more complicated.  Liabilities arising from a business are not covered by a homeowner’s policy. 

Between the years 2010 and 2013, central and eastern United States had an average of five times as many quakes per year as between 1970 and 2000. 

Standard homeowners, renters and business insurance policies do not cover damage from earthquakes.  Coverage is available either in the form of an endorsement or as a separate policy for homeowners, renters and small business owners. 

Earthquake insurance provides protection from the shaking and cracking that can destroy buildings and personal possessions.  Coverage for other kinds of damage is provided by standard home and business insurance policies.

Cars and other vehicles are covered for earthquake damage by comprehensive insurance which also provides protection against flood and hurricane damage as well as theft. 


Crash Test

A Crash Test is a form of destructive testing. It is usually performed in order to insure safe design standards.

A crashworthy design reduces death and injury risk. Structure and restraints (safety belts and airbags) are the main aspects of a vehicle’s design. This determines its crashworthiness. Good structure means a strong occupant compartment.  Also there should be crumple zones to absorb the force of a serious crash.  Side structures manage the force of a striking vehicle . A strong roof ensures it does not collapse in a rollover.

Structure/Safety Cage:
Vehicle’s structural performance engineers measure the amount of intrusion into the occupant compartment after the crash. In the moderate overlap test, measurements are taken at nine places around the driver’s seat. In the small overlap test, 16 locations on the driver side interior and exterior are measured. The amount and pattern of intrusion shows how well the front-end crush zone managed the crash energy and how well the safety cage held up.

Injury Measures:

 Sensors in the head, neck, chest, legs and feet of the dummy indicate the level of stress and strain on that part of the body.

Restraints/Dummy movement:
Even if injury measures are low, it’s important to consider the dummy’s movement during the crash,  This is because not all drivers are the same size as the dummy or seated exactly the same way. A close call for the dummy could be an actual injury for a person.
Before each crash test, technicians put greasepaint on the dummy’s head, knees and lower legs. After the test, the paint shows what parts of the vehicle came into contact with those parts of the dummy. The paint, combined with high-speed film footage of the crash, allows engineers to evaluate the dummy’s movement.

There are various types of tests:

Frontal impact tests which is what most people initially think of when asked about a crash test. These are usually impacts upon a solid concrete wall at a specified speed, but can also be vehicle-vehicle test. SUVs have been singled out in these tests for a while, due to the high ride-height that they often have.

Offset Tests:

in which only part of the front of the car impacts with a barrier (vehicle). These are important, as impact forces (approximately) remain the same as with a frontal impact test, but a smaller fraction of the car is required to absorb all of the force. These tests are often realized by cars turning into oncoming traffic. This type of testing is done by the USA Insurance for Highway Safety (IIHS), Euro NCAP Australasian New Car Assessment Program and ASEAN NCAP.

Small overlap tests:

This is where only a small portion of the car’s structure strikes an object such as a pole or a tree.  This is the most demanding test as it loads the most force onto the car’s structure at any given speed. These are usually conducted at 15-20% of the front vehicle structure.

Side Impact Tests:

These forms of accidents have a very significant likelihood of fatality, as cars do not have a significant crumple zone to absorb the impact forces before an occupant is injured.

Roll Over Tests:

These test a car’s ability (specifically the pillars holding the roof) to support itself in a dynamic impact. More recently dynamic rollover test have been proposed as opposed to static crush testing.

Roadside hardware crash tests are used to ensure crash barriers and crash cushions will protect vehicle occupants from roadside hazards, and also to ensure that guardrails, signposts, light poles and similar appurtenances do not pose an undue hazard to vehicle occupants.

Old versus New:

Often on old and big car against a small and new car or two different generations of the same car model. These tests are performed to show the advancements in crashworthiness.

Computer Model:

Because of the cost of full side crash tests, engineers often run many simulated crash tests using computer models to refine new vehicle or barrier designs before conducting live tests.

Crash tests are conducted under rigorous scientific and safety regulations. Each crash test is very expensive so the maximum amount of data must be extracted from each test. Usually this requires the use of high speed data acquisition, at least one triaxial accelerometer and a crash test dummy.
There are a number of crash test programs around the world dedicated to providing consumers with a source of comparative information in relation to the safety performance of new and used vehicles.

The Insurance Institute for Highway Safety, as at October 2, 2014, published safety results for three large luxury cars in the IIHS small overlap front test.  The Infiniti Q70 achieved a good rating, the Lincoln MKS earned a poor rating and the BMW 5 series earned a marginal rating.

On September 18, 2014, the 2015 Volkswagen Jetta earned the IIHS Top Safety Pick award, thanks to a structural upgrade to improve small overlap protection.

The Kia Soul, previously rated poor in the IIHS small overlap front test now earns a good rating, due to structural improvements. The Kia Forte also improved, but only to a marginal rating.