Lemonade Plans to Enter Auto Insurance Market With Lemonade Car

The technology-driven insurer Lemonade is moving into the $300 billion auto insurance market, with Lemonade Car. Launched just five years ago to sell homeowners and renter's policies, the company has added both term life and pet insurance to its product lineup in the past year. 
 

Squeezing Into a Crowded, But Lucrative, Market

Lemonade must still get approval from each state's insurance department to sell its auto policies there. In the meantime, it has set up an "early registration" page for prospective customers on the Lemonade website.

Given the company's track record and the fact that some states are "file and use," as industry jargon puts it, the process could be smoother than for an insurer just starting out. One insurance department spokesperson predicted approval inside of 30 days after the company files, since it has already established itself in that state with its other product lines.

Lemonade, when asked, did not disclose a timeline for applying for approval from the states or indicate whether its auto policies would be available nationwide in the near future. It did say it was readying the product "for launch within the year."

Currently, consumers who register on the web page for Lemonade Car receive a return email telling them to expect updates and requests for feedback as Lemonade builds "the best car insurance out there!" Lemonade is aiming for both new customers and current ones who'd be interested in bundling their auto insurance with their other Lemonade policies.

The auto insurance market is 70 times the size of either the renter's or the pet insurance markets, the company noted in an April 20 press release. It is also a market with many players.

State Farm Group is the largest auto insurer by market share, with 16.2% of the total private passenger auto market, according to the National Association of Insurance Commissioners' latest market share report. After the top nine carriers, the remainder have less than 2% of the market each, but even 25th-ranked Sentry Insurance Group writes more than $1.1 billion in premiums annually, according to the report.

How Lemonade Could Be Different

Shai Wininger, Lemonade’s COO and co-founder, said in the press release that 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 [electric vehicles] and environment-friendly cars."

Part of Lemonade’s appeal is the ease of use of its platform, as well as the fact that it gives unused premiums to nonprofits selected by its community and customer base during an annual giveback. The company's online slogan is "Instant everything. Incredible prices. Big heart."

The data-driven, bot-over-broker company says its existing customers already spend $1 billion on car insurance each year—via other providers. In addition, the majority of them are car owners. Lemonade had more than 1 million active customers as of year-end 2020.