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Lemonade is an insurance carrier which uses a combination of AI and behavioural economics to approve or deny insurance claims. The company, which challenges traditional insurance models by sourcing capital for claims directly from pooled policy premiums of like-minded ‘peer’ groups, runs claims received past a series of innovative anti-fraud algorithms to ensure the fairest outcome for insurer and customer alike.
Lemonade’s claims bot ‘Jim’ converses with policy holders in the event of a claim using virtual honesty nudges designed off the back of years of behavioural economics research. The algorithms driving the claims bot then draw on a host of proprietary and user-generated data points to provide a decision on whether the claim should be paid out, all without the need for human interference. Lemonade also has another bot, 'Maya', which is designed to help resolve policy-related queries such as billing issues, adding family members and, for renters, handling landlords requirements.
A year after launch, Lemonade received investment from GV (formerly known as Google Ventures), XL Catlin and Sequoia, amongst others. In December 2017 the company received $120m Series C investment from SoftBank Group. Softbank have continued its involvement with Lemonade, leading its $300m Series D (announced April 2019). Other participants in the round include Allianz, General Catalyst and GV.
In January 2017, the company made headlines after claiming a ‘new world record’ for the fastest claim pay-out, made in just three seconds. Although the relatively simple claim in question acted more as a proof-of-concept than anything, the case opened the gates for a fundamental shift in claims processing technology.
In August 2018, Lemonade announced a partnership with Moved, a startup who have developed a free personal assistant to aid with the home moving process. In that year also, they would team up with co-working space startup WeWork to offer renters insurance to its 175,000+ members. A few months later, Lemonade would announce plans to expand into Europe, its first foray into the international market.
In 2019, multiple reports indicated that the early stage insurance company planned to go public at an approximate $2 billion valuation. Lemonade, who selected JP Morgan to lead the initial public offering (IPO), are planning to seek up to $500 million to fuel its global expansion plans. Towards the end of the year, in November, it was revealed that Lemonade was delaying its plans to IPO due to "concerns about how fast-growing tech firms are being viewed by the market".
The first country to be ticked off Lemonade's international bucket list was Germany, with customers able to purchase contents insurance or contents insurance with a liability package as of June 2019.
For Lemonade's 2019 giveback, in which the company donates unclaimed money to causes chosen by its customers, the insurer donated a total of $631,540 - compared with $162,135 in 2018, and $53,174 in 2017.
As of the end of 2019, Lemonade offered homeowners and rental insurance in Arkansas, Arizona, California, Colorado, Connecticut, District Of Columbia, Georgia, Iowa, Illinois, Indiana, Massachusetts, Maryland, Michigan, Missouri, New Jersey, New Mexico, Nevada, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Virginia and Wisconsin in the US. It was also available in Germany, with plans to expand further in Europe in the 2020.
In February 2020 Lemonade announced it was planning to expand into a new vertical: pet insurance. Although little was revealed in the initial statement, coverage will be limited to cats and dogs, and will be made available sometime in 2020. CEO Dan Schreiber stated that 70% of Lemonade's customers are also pet owners.
Lemonade launched a nonprofit foundation in March 2020. By unanimous vote of its board and shareholders, the insurtech donated shares valued at over $20m to The Lemonade Foundation, which will focus on harnessing AI, data and software to develop socially impactful products and programs. The move it in addition to its Giveback program.
That same month, the company asked its customers to redirect unclaimed premiums to buy medical supplies for health workers on the front lines of the battle against global pandemic Covid-19.
Lemonade launched in its second European country in April 2020. Residents of the Netherlands are able to get the company's 'Policy 2.0' - currently only available to users in Germany, where Lemonade launched late in 2019.
Lemonade filed to go public in June 2020, initially planning to price shares at $23-26, before raising the price to $26-28. The company listed on the 2nd July, with its shares doubling on first day of trading.
In July 2020 Lemonade launched its pet insurance for cats and dogs, its first entry into a new vertical since launching its renters/home owners insurance in 2016. Cover will cost $12 a month, with a 10% discount to existing policy holders who choose a bundle option.
In September 2020, Lemonade announced that it would launch in France by the end of 2020, marking its entry to its third European country.
The following month Tokio Marine announced it was to take part in the reinsurance program of Lemonade, as the beginning of a new strategic partnership with the US insurtech. The two will collaborate on technologies and design that deliver 'superior CX and UI', use of third party data for underwriting, and prompt claims payments.
In its Q3 2020 letter to shareholders, released in November, Lemonade revealed it would be testing a life insurance product over the following 90 days. It stated it had established the Lemonade Life Insurance Agency and expects to 'bring the Lemonade experience to term life soon'.
Lemonade launched in France, its third European market, in December 2020.
At the end of 2020, Lemonade revealed they had reached one million customers.
Lemonade launched its term life insurance offering, with no medical exam required, in January 2021. Lemonade Life starts at $9/month with term options of 10 and 20 years, and coverage (up to $1m) is issued by North American Company. The news came less than a week after the company revealed that its pet insurance product, which launched 6 months prior, now makes up around 5% of its business.
In March 2021 Lemonade released its shareholder letter with its Q4 results and 2021 predictions. It revealed it had seen quite a lot of cross-selling success, with around half of its pet and life policies - which launched in the last year - bought by existing customers. The company also mentioned new major products and markets, but didn't reveal further detail.
In April 2021 Lemonade announced it planned to launch Lemonade Car - insurance designed for 'safe drivers and environmentally-friendly cars' later in 2021.
In September 2021 Lemonade announced it was adding an additional offering to its pet insurance, tailored for puppies and kittens, following recent strong premium growth. The package is designed for preventative care, rather than reactionary, and will cover microchipping and vaccinations.
In November 2021 Lemonade announced it was acquiring Metromile in an all stock transaction expected to close in Q2 2022. Through the use of Metromile's proprietary data and machine learning Lemonade expects to transform its Lemonade Car offering "by collapsing time, flattening risk and increasing efficiency".
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