Israeli insurtech firm Lemonade to roll out car insurance for US drivers
Company sets sights on $800b global vehicle insurance market with new service that will leverage telematics to set affordable rates
Ricky Ben-David is The Times of Israel’s Tech Israel editor and reporter.
Israeli-founded insurance tech firm Lemonade announced Wednesday that it will begin rolling out car insurance for US drivers nationwide, starting with Illinois, as the company’s newest offering.
Lemonade has been making waves in the traditional insurance industry since 2015 when it was founded in Tel Aviv by entrepreneurs Shai Wininger, also a co-founder of Fiverr, and Daniel Schreiber. The company uses technology such as artificial intelligence and chatbots, as well as behavioral economics, to deliver affordable homeowners, renters, life, and pet insurance across the US, all via a mobile app. Some of its offerings are also available in Germany, the Netherlands, and France.
Lemonade claims its simplified claims process and rates — it offers renters insurance starting at $5 per month, and homeowners insurance starting at $25 per month — resonates strongly with younger consumers. It also runs a charity element called the GiveBack program, where its users select a non-profit organization they care about and, once a year, Lemonade tallies up unclaimed money pooled from policyholders who chose that same cause and donates it to the organization. The program was featured in TIME magazine’s 100 best inventions in 2019.
Lemonade had raised close to $500 million with leading investors such as SoftBank — its biggest backer — Aleph VC, OurCrowd, Google Ventures, and Sequoia Capital, and had one of the most successful IPOs (initial public offerings) in 2020 on the New York Stock Exchange at a valuation just short of $2 billion.
The company’s newest service, Lemonade Car, eyes a close to $800 billion global car insurance market. It will leverage telematics, a field that combines telecommunications and informatics, to measure how much people drive, and how safely they do so, to provide better rates for safe and low-mileage drivers, the company said. The app will also offer real-time crash detection, access to 24/7 roadside assistance, and the ability to dispatch emergency services.
Drivers of hybrid and electric vehicles (EVs) are set to get special discounts on their car insurance, as will existing users of Lemonade’s other insurance offerings.
“The target audience is anyone underserved by the current car insurance industry,” Wininger told The Times of Israel via email. “By pricing based on how much and how safe you drive, Lemonade Car will be able to provide better prices – and fairer prices- rather than how it’s currently done (broad stroke proxies like credit scores, age, gender – all parameters that don’t indicate how much and how safe one drives). Also, we’re looking at our current Lemonade customer base- homeowners, renters, pet owners, etc who can now bundle their insurance with Car, get discounts, and get all their insurance needs from one place.”
Lemonade Car is the company’s “biggest project ever,” Wininger wrote in a blog post on Wednesday announcing the new service.
“We stood up entire teams to handle tows, repairs, body shop services, as well as support for the 24/7 roadside assistance and emergency services we now offer,” he said. “Providing a best-in-class car claims experience means being there for your customers 100 percent of the time, with surprisingly fast service and lots of empathy.”
The claims process for Lemonade Car will allow users to file quickly, access tow services and emergency EV battery recharge, and track repairs, the company said.
And there’s an environmental element.
“We wanted to introduce a product that will not only reinvent how people buy car insurance, manage their policy, and file claims, but also do something good for the planet. Since we can’t stop using cars just yet, we will help compensate for the CO2 emitted from our customers’ cars by financing reforestation on an ongoing basis. Using the telematics technology in our app, we’re able to estimate how much carbon dioxide is emitted by each ride, and plant trees accordingly,” said Wininger.
Lemonade is headquartered in New York, with offices in Tel Aviv and Amsterdam. The company employs close to 1,000 employees.
It reported annual revenue of $94 million in 2020 but the company is not yet profitable. Lemonade is set to announce third-quarter 2021 financial results next week.