InsurTech

Lemonade enters crowded auto insurance market

Insurtech company Lemonade, which went public last July in a $319 million IPO, is driving into a new, hyper-competitive market: car insurance. At the time of writing, its market cap is sitting just above $5 billion.

On April 20, Lemonade announced it’s preparing to add car insurance to its current lineup, which already includes homeowners, renters, pet and life insurance. The addition of auto insurance represents its third expansion in less than 12 months. The company launched pet insurance last year and term life insurance this year.

Lemonade says most of its customers already own cars, spending about $1 billion on auto insurance every year. Market research company IBISWorld estimates the size of the U.S. auto insurance market at $311 billion.

“We’re seeing an overwhelming demand for a Lemonade car insurance product from our customers. And so, since last year, a large part of our team has been working on what we believe will become one of the best car insurance products on the market,”  Shai Wininger, chief operating officer and co-founder of Lemonade, said in a news release. “Lemonade Car will use technology to handle emergencies and pay claims fast, will offer great prices to safe drivers, and will be especially attractive to drivers of EVs and environment-friendly cars.”

During the company’s March 2 earnings call, Wininger alluded to the car insurance offering, which he said “may well be the most significant launch we’ve ever done.”

Lemonade sells insurance in the U.S., Germany, the Netherlands and France.

PYMNTS.com ranked Lemonade as the eighth biggest IPO last year among “connected economy” companies based on market capitalization. Post-IPO, the company raised about $640 million in a follow-on offering.

At the close of 2020, Lemonade had 1 million customers and $213 million in premiums in force. The Israeli-American company posted $94.4 million million in revenue last year and a net loss of $122.3 million.

Lemonade envisions $372 million to $378 million of premiums in force this year, with revenue at $114 million to $117 million.

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