Lemonade is an insurance fintech that offers affordable coverage for renters and homeowners.
Lemonade announced on June 8 it had filed an initial public offering and plans to list its shares to the public under the “LMND” ticker symbol on the New York Stock Exchange.
Here’s what consumers need to know about the insurer.
What is Lemonade Insurance?
Lemonade offers affordable homeowners and renters insurance in more than half of states in the U.S. There are plans to roll out coverage in more states. It also offers contents and liability insurance in Germany and the Netherlands.
Lemonade launched in 2016 and maintains its corporate headquarters in New York City.
How Lemonade is disrupting the insurance industry
Lemonade uses AI, data and behavioral economics to save customers time and money when shopping for home and renters insurance. The company’s website says that 30 percent of claims can be handled instantly through the AI bot and approved in as little as three seconds.
“A two-minute chat with our bot, AI Maya, is all it takes to get covered with renters or homeowners insurance,” the company’s SEC S-1 filing says. “Claims are filed by chatting to another bot, AI Jim, who pays claims in as little as three seconds. This breezy experience belies the extraordinary technology that enables it: a state-of-the-art platform that spans marketing to underwriting, customer care to claims processing, finance to regulation.”
Lemonade names Allstate, Farmers, Liberty Mutual, State Farm and Travelers among its competitors. The company has raised nearly half a billion dollars in venture capital since its 2016 launch, according to Insurance Journal.
As detailed in Lemonade’s S-1 filing, the company is not yet profitable, though it’s seeing tremendous year-over-year growth. Its gross written premium grew from $9 million in 2017 to $116 million in 2019. The company said that its gross written premium reached $38 million in the first three months of 2020. Because of an aggressive national and international expansion (and the associated costs), its net losses were $108.5 million in 2019 and $36.5 million in the first quarter of 2020. The company had 329 employees as of March 31.
Lemonade’s market: Millennials and first-time insurance buyers
Lemonade is built to attract millennials and first-time home and renters insurance buyers. The company offers premiums that can be up to 50 percent lower than traditional insurance carriers and a slick virtual experience that gives results, approvals and answers almost instantly.
At the end of 2017, Lemonade insured 100,000 homes. By the end of 2018, it insured more than 425,000. Lemonade’s SEC filing states that 90 percent of customers didn’t switch from another carrier (meaning they were new insurance customers) and 70 percent are under age 35.
The future of Lemonade insurance
The U.S. market for online insurance is projected to hit $31.3 billion in 2020, up from roughly $20 billion in 2015, according to an IBISWorld research report.
Though Lemonade currently offers insurance products in 28 states (including Washington, D.C.), Germany and the Netherlands, the insurer is licensed in 40 states and holds a pan-European license for 31 countries across Europe.
The SEC filing paperwork states that the company plans to capitalize on growth opportunities including converting uninsured individuals into first-time insurance buyers, launching new insurance product offerings, growing spend with existing customers as their needs expand over time and launching service offerings in new geographic markets.
Featured image by Westend61 of Getty Images.