Since our first report last year, Lemonade Insurance, a tech start-up that planned to offer peer-to-peer insurance products, has launched in four states, offering homeowners and renters insurance in New York, California, Illinois, and New Jersey. Lemonade’s cutting-edge use of technology and its alternative business model could prove disruptive to the insurance industry.

Lemonade uses artificial intelligence, including a chatbot, to help process claims. Policyholders submit claims using Lemonade’s mobile app. The process includes recording a video of yourself describing the claim. Because of its use of AI, Lemonade can process and approve claims in seconds. According to Lemonade, it set an unofficial world record in late 2016 by approving a claim for stolen jacket in three seconds.

Lemonade’s business model also differs from the traditional insurance company model. Most insurers profit off of the difference between amount of premium taken in and amount paid out for claims. Lemonade profits by taking an upfront cut of premium. The company uses another portion of the premium for reinsurance and other expenses. Any remaining premium that is not used to pay claims is then donated to charities. Policyholders can choose among several charities to which Lemonade donates that remaining premium. The policyholders that choose the same charities are grouped together and the remaining premium for each group is donated to that group’s selected charity. In its first year, the total remaining premium donated to charities was about $53,000, which was around 10% of Lemonade’s revenues from September 2016 through June 2017.