Lemonade bursts into US $ 300 billion auto insurance market
The news: The latest US-based insurtech cover, Lemonade car, was brought online in Illinois before rolling out nationwide in the coming months.
How we got here: Insurtech launched home and tenant insurance in 2016, followed by pet insurance in the second half of 2020 and term life insurance in February. With auto insurance, Lemonade is positioning itself as a one stop shop for consumer insurance needs.
Why this might be successful: Lemonade’s new product has advantages that we believe make auto insurance products popular.
- Usage based premiums. The Lemonade app uses telematics to measure how much and how safely people drive to inform their subscription, like we predicted it when the waiting list opened in April. This allows market players to offer more flexible and adapted prices, generating premium growth: Our forecast waits 52.5 million US drivers will buy UBI coverage by 2023, up from 37 million this year.
- Fast and smooth complaint handling. Users can file complaints in minutes, and its proprietary machine learning algorithm automates aspects of complaint handling to render a decision in less time. The capacity meets the increased expectations of consumers: 65% consumers who adopted digital claims processing during the pandemic intend to stick with them.
- Environmental incentives. Lemonade offers better prices for electric and hybrid cars, as well as low mileage drivers. This is particularly timely – the growing risks of climate change are a priority for many consumers, and the federal government is to push for greener cars.
Looking forward: Auto insurance doesn’t just supplement Lemonade’s existing coverage options, it will be insurtech’s biggest revenue stream to date.
- To boost auto insurance policy sales, Lemonade will be offering discounts to customers who bundle their auto insurance with its other products, which is both cost effective and convenient.
- Limonade believes that its customers spend more than $ 1 billion one month on auto insurance. If it can only grab a fraction of it, let alone attract new users, that will lead to significant revenue growth.
- Not only does auto insurance cost Following than Lemonade’s current coverage options, but the The U.S. auto insurance industry is worth an estimated $ 300 billionâ70 times the size of the tenant and pet insurance markets combined.