{"id":2231,"date":"2021-04-22T05:33:06","date_gmt":"2021-04-22T09:33:06","guid":{"rendered":"https:\/\/insurtechadvisors.com\/?p=2231"},"modified":"2021-04-22T05:33:14","modified_gmt":"2021-04-22T09:33:14","slug":"lemonade-announces-auto-insurance-coming-fall-2021","status":"publish","type":"post","link":"https:\/\/insurtechadvisors.com\/old\/2021\/04\/22\/lemonade-announces-auto-insurance-coming-fall-2021\/","title":{"rendered":"Lemonade Announces Auto Insurance, Coming Fall 2021"},"content":{"rendered":"<p>Lemonade, the Insurtech,\u00a0<a href=\"https:\/\/investor.lemonade.com\/news-and-events\/news\/news-details\/2021\/Lemonade-Opens-Early-Registration-for-Lemonade-Car\/default.aspx\">announced<\/a>\u00a0that it intends to introduce Auto insurance within the next few months. This would be their second major product launch in 2021. In February, they teamed up with\u00a0<a href=\"https:\/\/www.bestow.com\/\">Bestow\u00a0<\/a>to launch Life Insurance. When Lemonade Auto Insurance is introduced, it will be their fifth product after Renters, Home, Pet and Life.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e94b1a82eb3\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e94b1a82eb3\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/insurtechadvisors.com\/old\/2021\/04\/22\/lemonade-announces-auto-insurance-coming-fall-2021\/#Why_this_makes_sense\" >Why this makes sense:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/insurtechadvisors.com\/old\/2021\/04\/22\/lemonade-announces-auto-insurance-coming-fall-2021\/#Why_that_doesnt_make_sense\" >Why that doesn&#8217;t make sense:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/insurtechadvisors.com\/old\/2021\/04\/22\/lemonade-announces-auto-insurance-coming-fall-2021\/#What_this_means_for_the_incumbents\" >What this means for the incumbents:<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Why_this_makes_sense\"><\/span><strong>Why this makes sense:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li><strong>It is simple:<\/strong>\u00a0It is a natural extension of their wish to become a life cycle carrier.\u00a0 As they have discussed in the past, their goal is to convert policyholders from renters to home policies. These policies are more valuable and theoretically offer them more profitability and, more importantly, they are stickier customers. I suspect Lemonade realized that when Covid accelerated many renter moves from urban areas to suburban areas, this became a goldmine for their desire to sell them home insurance. However, along with the move came the need for these customers to own cars. And since they do not currently offer a car product, it prompted these current customers to shop for insurance. They probably lost more customers than they gained.<\/li>\n<li><strong>This reduces their overall customer acquisition costs:<\/strong>\u00a0in the short term, they will cross-sell the heck out of their current customer base of more than a million customers. By doing this, their acquisition cost for the auto policy might be as low as a few dollars. This means that their average cost per product acquisition might fall by 20% &#8211; 30%. More importantly, the lifetime value of their customers may more than double.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Why_that_doesnt_make_sense\"><\/span><strong>Why that doesn&#8217;t make sense:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li><strong>Personal auto is a race to the bottom:<\/strong>\u00a0The auto insurance market is a hyper-competitive market prone to switching and price comparison shopping. It is one of the most expensive search terms, meaning that once Lemonade has plateaued with cross-selling into its current customer base, their acquisition costs will go through the roof.<\/li>\n<li><strong>The market for electric vehicles is complex:<\/strong>\u00a0they claim that the product will be &#8220;especially attractive to drivers of EVs and environmentally-friendly cars.&#8221; This market is certainly developing, but the manufacturers of these vehicles are also entering the insurance market (<a href=\"https:\/\/stories.rivian.com\/rivian-insurance\">Rivian SUVs<\/a>,\u00a0<a href=\"https:\/\/news.yahoo.com\/gm-wants-transform-beyond-cars-185246972.html\">GM with Onstar<\/a>,\u00a0<a href=\"https:\/\/www.tesla.com\/insurance\">Tesla<\/a>\u00a0and\u00a0<a href=\"https:\/\/www.swissre.com\/media\/news-releases\/nr-20201012-swiss-re-and-daimler-launch-movinx-to-transform-automotive-mobility-insurance-business.html\">Dailmer<\/a>), and they have a leg up, because their products are directly connected to their vehicle platforms. Moreover, electric vehicles and hybrid vehicles are more costly to repair, so the severity increases. A minor error backing out of the garage can damage a $5K sensor.<\/li>\n<li><strong>You have to take down the Golliaths:<\/strong>\u00a0The top ten car insurance companies account for 75% of the market. They spend billions on advertising and brand awareness, and they are becoming as sophisticated as the insurtech startups like Root and Metromile. Many of them have created sister brands to bring telematics products to the market for millennials such as\u00a0<a href=\"https:\/\/www.spireinsurance.com\/\">Spire<\/a>\u00a0and\u00a0<a href=\"https:\/\/www.hiroad.com\/\">Hi-Road<\/a>.<\/li>\n<li><strong>Slick tech isn&#8217;t enough:<\/strong>\u00a0Lemonade declares that they will use technology to deal with emergencies and settle claims quickly. Will they provide a better emergency service than Farmers or Wawanesa Insurance by working with\u00a0<a href=\"https:\/\/www.honkforhelp.com\/\">Honk Roadside Assistance<\/a>? Will they settle claims faster than Frankenmuth, Amerisure, Responsive or the many other carriers that use the payment platform of\u00a0<a href=\"https:\/\/www.oneinc.com\/\">OneInc<\/a>?\u00a0 They are unlikely to differentiate themselves more than the market has already done.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"What_this_means_for_the_incumbents\"><\/span><strong>What this means for the incumbents:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>As an incumbent carrier, this is a continuation of the message &#8220;you need to ensure that your product and service offering is modernizing&#8221;. If you have not yet done so, here are three areas to explore:<\/p>\n<ul>\n<li><strong>Product market fit<\/strong>: Does your product meet the changing needs of your current and prospective customers? Can you sell and serve as they want? Whether through agents or directly? Can you continue to grow if you restrict yourself to just one sales channel?<\/li>\n<li><strong>Pricing sophistication:<\/strong>\u00a0Are you using newer sources of data telematics and third-party data to improve the price and underwrite your policies quicker or better?<\/li>\n<li><strong>Analytical rigor:<\/strong>\u00a0Have you invested in analytics and analytical brainpower to critically evaluate your portfolio? Do you use analytics to improve service? Reduce fraud? Identify litigation exposure?\u00a0 Just to name a few.<\/li>\n<\/ul>\n<p>I wonder if Lemonade will be the first US carrier to crack the code when creating a real container insurance product. One where the customer can add products and services as easily as placing items in the Amazon cart and ultimately presenting them with a unified single price. More importantly, a unified experience &#8211; from acquisition to service &#8211;\u00a0<strong>that is a product and a company I am waiting for!<\/strong><\/p>\n<p>Feel free to reach out.<\/p>\n<p><strong><span style=\"font-family: 'Calibri',sans-serif;\"><a href=\"https:\/\/insurtechadvisors.com\/old\/?locn=sig&amp;parm=%7b%7bUniqueID%7d%7d\" target=\"_blank\" rel=\"noopener\">Insurtech Advisors\u00a0<\/a><\/span><\/strong>is dedicated to helping regional insurance carriers and agencies find and partner with Insurtechs enabling you to thrive and continue to meet the needs of your members and independent agents. We work closely with your team to identify opportunities and aspirations and then personally curate and introduce you to the best Insurtechs to pilot.<\/p>\n","protected":false},"excerpt":{"rendered":"<p class=\"card-text\">Lemonade, the Insurtech,\u00a0announced\u00a0that it intends to introduce Auto insurance within the next few months. This would be their second major product launch in 2021. In February, they teamed up with\u00a0Bestow\u00a0to launch Life Insurance. When Lemonade Auto Insurance is introduced, it will be their fifth product after Renters, Home, Pet and Life. Why this makes sense: [&#8230;]<\/p>\n<p class=\"m-0\"><a class=\"btn btn-outline-secondary btn-read-more\" href=\"https:\/\/insurtechadvisors.com\/old\/2021\/04\/22\/lemonade-announces-auto-insurance-coming-fall-2021\/\">Read More<\/a><\/p>\n","protected":false},"author":1,"featured_media":2213,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","content-type":"","wds_primary_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2231","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/posts\/2231","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/comments?post=2231"}],"version-history":[{"count":0,"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/posts\/2231\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/media\/2213"}],"wp:attachment":[{"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/media?parent=2231"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/categories?post=2231"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/insurtechadvisors.com\/old\/wp-json\/wp\/v2\/tags?post=2231"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}