How Lemonade Is Disrupting The Insurance Industry

When it went public July 2, Lemonade Inc. LMND disrupted the traditional insurance model by offering its customers complete transparency and more control over their insurance policies.

What Happened: Lemonade offers a mobile insurance solution, using an artificial intelligence bot named Maya, that allows its customers to both purchase and customize their homeowners, renters, term life and pet insurance and receive claims within minutes.

See also: Lemonade Renters Insurance Review

Lemonade charges a flat fee for its policies, and instead of keeping the money its customers don’t claim, it allows them to donate it to causes they care about.

More About Lemonade: Lemonade is a Public Benefit Company and a Certified B Corporation, which means it is held to the highest standards for public transparency, legal accountability and is verified for balancing profit and growth to be purpose-driven toward social activism.

Lemonade’s mission is to “transform insurance from a necessary evil into a social good.”

Why It Matters: The disruptive potential of Lemonade’s business model has not gone unnoticed by investors.

Shares in the company are currently trading up almost 200% since going public last year.

The company has also been quick to grow, announcing expansions in both its products and where its services are available globally.

In 2020, Lemonade launched pet health insurance — which is a growing industry.

“The U.S. pet insurance market is valued at a couple of billion dollars, and with the increasing number of pet adoptions coupled with rising veterinary costs, we believe this market can grow rapidly,” Daniel Schreiber, Lemonade's CEO and co-founder, said in a July 15 press release.

In December, Lemonade announced the launch of renters insurance in France, adding to the insurance products it already offers in most of the U.S., The Netherlands and Germany.

“Home insurance is often legally required in France, which makes it a compelling opportunity for Lemonade’s next European country launch,” Schreiber said. 

To end 2020, Lemonade announced that it had reached the milestone of more than 1 million customers in the 1,500 days since launching its services, an achievement it says is “15-45 years faster than industry leaders such as State Farm, Allstate, GEICO, and USAA.”

Shares in the company are trading 20% higher since the announcement.

What’s Next For Lemonade: Lemonade shares cooled off after their January highs after Lemonade announced a proposed public offering on Jan. 11 that it has yet to close.

It plans to use the proceeds for general corporate purposes. Investors are likely hoping that Lemonade will continue to expand across the European Union and the remaining states where it is not yet available. 

LMND Price Action: Lemonade shares were trading near-flat at $148 at last check Friday. 

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