After much fanfare, U.S. insurtech firm Lemonade has begun trading and plenty of established insurers will be keeping an eye on how the start-up performs.

Like many other insurtech ventures, Lemonade is promising to disrupt the insurance industry by providing consumers with cheaper and more attractive products and services. The company is initially trading in New York, and offering home-owners P&C cover from $35 a month and renters insurance from just $5 a month. It markets its products across a mobile platform that incorporates an intelligent virtual assistant that helps consumers with their purchase queries. Lemonade reckons it can sign up a new customer in 90 seconds and is able to settle claims in three minutes.

There are three main reasons why Lemonade’s progress is going to be closely tracked by big insurers.

Firstly, its business model and customer experience are “born in the new”. Lemonade’s peer-to-peer (P2P) business model taps into the social sharing and community trends that are such powerful preferences of today’s consumers. It takes a flat 20% fee from the premiums paid by customers. The remainder of the premium income is pooled and used to pay claims. Surplus funds are donated to “not-for-profit” causes. Customers select a cause of their choice when they sign up with Lemonade and their premium income is pooled with that of like-minded peers.

The company argues that its P2P model builds trust with customers because the insurer has no incentive to resist legitimate claims. It expects this to minimize fraudulent claims because such deception would not affect the insurer but instead deprive the cause chosen by the customer of extra funds. Lemonade is a registered B-Corp public benefit corporation.

The start-up then plans to deliver this “social” business model with a fully modern customer experience. It promises an Uber-like experience for insurance, with hassle-free billing and claims processing that is all online and moves at the speed of commerce akin to that of Amazon, Airbnb, and the other born-in-the-new pace setters.

Lemonade is not the first start-up to launch a P2P insurance service. Friendsurance in Germany and Inspeer in France, among others, have similar business models. However, Lemonade’s aggressive push into the U.S. market is likely to give a good indication of the potential of P2P insurance offerings and their possible impact on the established market.

Secondly, Lemonade has attracted some heavy-weight backing. Last December it secured funding of $13 million from Sequoia Capital in one of the biggest insurtech seed investments of 2015. Israeli venture capital firm Aleph also invested in the firm. Furthermore, Berkshire Hathaway’s National Indemnity as well as Everest Re, Hiscox, Munich Re, TransRe and XL Catlin are reported to be among Lemonade’s reinsurers. Plenty of major participants in the insurance industry believe Lemonade can succeed.

Finally, the insurer started trading about a year after its founders Daniel Schreiber and Shai Wininger began drawing up a business plan. This is a quick ramp-up. Insurtech firms are coming to market with disruptive business models and products at an increasingly fast pace. The time established insurers have to react to such challenges is shrinking rapidly.

The next few months will show how well Lemonade can execute its business plan and disrupt the insurance industry. If it’s successful in New York the company is likely to quickly spread its business to other big cities in the U.S.

There’ll be plenty of insurers watching to see how the fledgling firm performs.

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