Lemonade: innovative insurance done right

General

I recently started using Lemonade as my insurance company for renter’s insurance. It seemed quite interesting and innovative and I was impressed by the whole process of signing up. It’s a hassle-free insurance company with a very transparent business model.

They have an innovative way of structuring the pool. They cap their upside by charging a flat overhead rate on each policy. And any money left behind in the risk pool gets 100% donated. They have no incentive to deny claims as leftover funds in the pool is not a source of income for them. You also get to pick your pool’s cause. My pool is Code to Inspire. If the amount claimed by insured folks in my risk pool is less than the total premiums we all paid into the pool, then the difference will get donated and will be used to teach Afghan girls how to code.

But you never really know how good an insurance company is until you have a claim. Of course, I was never hoping to have to find this out. But some misfortune struck and I had to go through a claim.

The claim process was painless. It’s all done through a chatbot interface, but it was nuanced and human enough that I didn’t mind it at all. It really felt like having a conversation with a friend, as one by one I added the items I was claiming, taking pictures of receipts etc. I didn’t speak to anyone. Instead of a phone call, I was asked to record myself on video describing what happened. Now, I am not sure if a human just saw that video, or if they did a neural network based analysis of my micro-expressions to decide if I was speaking the truth.

Whatever they did, it took a total of 17 absolute hrs from the time I submitted the claim to the time it was approved. I woke up this morning with an email in my inbox that my claim was approved and the funds were already on their way. Here’s the approval email I got, with animated gifs and everything!

I doubt insurance could be made any better!

 

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Random finance-focused suggestions

General

These are random finance-focused suggestions that summarize what I often discuss with friends one-on-one. This is not a comprehensive list. And this is definitely not real financial advice. Different things for different people and different situations. Just sharing these in case they inspire some thoughts and ideas.

1. If you have student loans, don’t obsess about paying them off any sooner. It’s the cheapest credit you can get. Usually they fall well below 7%. There’s very little financial incentive to pay off student loans sooner and those funds are better used investing in other things and in yourself. Make the minimum possible payment you are required to make. Consolidate, extend, etc to bring your interest rate and monthly total to be as low as possible.

2. Instead use your additional savings to buy into Index Funds. On 10yr+ timelines they are one of the safest investments you can make. And will return a CAGR of 5%-9% with the potential of a lot more upside on longer time horizons.

3. Set and forget. Make good decisions and then put them on auto-pilot. Checking your portfolio daily, weekly, monthly doesn’t increase your return – in most cases it reduces it because it tempts you to try and time the market or to second guess yourself and you end up being worse off. Patience pays.

4. Savings accounts return interests lower than inflation. Any money you put in a savings account is actually shrinking. Use savings accounts. But just be aware that it’s the least productive place for your savings.

5. Understand the difference between assets and liabilities. Liabilities leave you worse off. A car is usually not an asset. If you need a car, buy the cheapest car you can get. The first home you buy is usually not an asset. Renting is sometimes better than owning, if you are disciplined enough to live within your means and can save on your own. If not, buying a house will force you to commit to saving up and to make some sacrifices – and you might be better off. But you will sometimes be trading off opportunity costs, time overhead and other intangibles that will be hard to quantify. Buy a house for the lifestyle and to force yourself to save. Any net financial gains should be considered welcome surprises, but don’t count on them.

6. Save, save save. But also invest in yourself. The world is changing at an accelerating clip. Everything you know can potentially become quite irrelevant in 5yrs. Upgrade yourself. Grow yourself. Learn to enjoy being uncomfortable and keep challenging yourself.

7. It’s never all or nothing. It’s all between the lines. There’s no one right thing to do. Do different things and do them in moderation.

A remote surgery use case for “fast lanes” over Internet

General

Let’s say a skilled surgeon is physically based in Boston. She needs to perform a surgery in Dallas.

The technology already exists today for some surgeries to be performed over the Internet. But for this to be reliable, she needs to guarantee that her internet connection has very low latency. She already pays for a very fast connection but that simply guarantees bandwidth, not latency. She is willing to pay extra to make sure she gets the latency she needs. In fact, it’s a legal and compliance requirement for her to make sure she has a high bandwidth and low latency internet connection when she performs surgeries.

Her neighbor doesn’t care about latency as much, and doesn’t want to pay for low latency when all he wants to do is stream large amounts of video that mainly requires high bandwidth.

Their ISP uses the same connection between them. But depending on their Internet plan, and/or the services being used, the surgeon’s Internet packets are prioritized over the tv watchers’ internet packets to guarantee she can do her work.

Should this be allowed?

Train to Toruń

Travel

On the train from Poznań to Toruń, random fellow passengers helped me put my bags away, offered me food and a drink which is definitely something spiked with something. And now we are using Google translate to communicate with each other.

I think they are Ukrainian. And we are mixing some Russian with Polish now.

They work in construction. Build bridges. They came from Ukraine to work in Poland.

I gave them chocolates from the U.K. One of them has a girlfriend called Marislova. The chocolates are now a gift for her.

And yes it was Vodka. We are best buds now 😜