This case explores InsurTech start-up Lemonade's disruptive new business model aimed at creating and delivering a 'shockingly great user experience' around a 'lovable brand' - in an industry plagued by low customer satisfaction. The digital disruptor leverages principles of behavioural economics to address conflicts of interest and mistrust which prevail in the existing industry. It uses digital technologies to automate, accelerate and manage an impressive amount of work - with few employees - thereby reducings customer effort and , increasing customer satisfaction to achieve cost-effective service excellence. The effortless experience is aggressively priced and relies on a flexible subscription-based pricing model. Artificial intelligence (AI), data and machine learning are key in the race to achieving data parity with incumbents. The case culminates in Lemonade's filing for an initial public offering (IPO) and asks where growth should come from next: incremental improvements, further expansion across the United States, global expansion beyond Germany and the Netherlands, or from new types of property.

On issues big and small, people often don't make the best possible decisions for the long term. The authors argue that the root cause of this sub-optimal decision-making is that our behaviour is guided by two types of processes: System 1 thinking and System 2 thinking. Whereas System 1 tends to operate effortlessly and automatically, the operations of System 2 are slower, more effortful and deliberate. System 1 judgments are based on perceptions, intuitions and emotions, while System 2 judgments in-depth logical analysis and reasoning. Not surprisingly, on a day-to-day basis, System 1 guides much of our behaviour. They introduce The Hot-Cold Decision Triangle, a framework that can enable better choices by enabling us to avoid the power of visceral urges.

A series of studies reveals that the warning labels added to risky products can make those products more appealing to consumers. The mere inclusion of a warning builds trust, because consumers feel that the seller is being honest--and over time that trust becomes more prominent, while the substance of the warning fades.