After taking off in New York, this is a big step for the Israeli startup that is looking to reshape the insurance industry
Israeli insuretech company Lemonade announced that they have filed for licenses to operate in 46 states across the US as well as Washington DC.
This step follows the start of their operations as a licensed insurance provider in the state of New York this past September.
Barring their expansion to Mississippi, Washington and Wyoming, which all have additional wait time requirements, this move if approved in all of the states, would give the Israeli company access to new customers across the country.
In their statement to the press, the company noted that they have received tens of thousands of requests to join their bot-automated insurance service from across the nation, giving them a strong incentive to push for a rapid expansion.
Helping to drive forward this growth is the roughly $60 million in funding that has been raised over the course of the past 12 months: first, their was the $13 million Seed, then the $14 million A, and finally $33-34 million B rounds from investors like Sequoia, Aleph, Google Ventures, XL, General Catalyst, Thrive Capital, and Tusk Ventures.
Interestingly, unlike many of the other new actors in the insurance tech space that act as brokers, basically integrating smarter technology into an antiquated industry, Lemonade acts as an actual insurance company. While they themselves are backed by reinsurers like other traditional companies, they make the payouts to claims themselves.
Their innovation that they are bringing to the property insurance industry as noted above is automation. Instead of calling up an agent, users simply contact them through the company’s app.
They claim that by removing the need for claims agents and others that can make for big overhead costs, they are able to give customers low rates and still be a very profitable business.
With prices that start at $5 for renter’s insurance and $35 for homeowner’s insurance per month, that seems like an attractive proposition.
The question is how they can grow their business to scale nationwide. On the one hand, this product seems perfectly geared for the highly sought after millennial market with its reliance on chatbots in the app. The issue that could arise here however is the low rate of homeownership among the younger generation, many of whom eschew the idea of owning properties. Add on top of this that buying insurance in general is not quite as ingrained in the US as it is elsewhere in the world, including in Europe and Israel.
However the Lemonade team feels that they are up to the challenge, and they have the war chest to prove it. Hopefully, they can convince the public with their low rates, that looking at their statistics after their first 48 hours after they opened in New York averaged out to be around $7 for renter’s and $50 for homeowner’s insurances, that it is worth picking up a policy.
While we don’t have stats on Lemonade’s growth since their launch in September, hopefully the company will be able to shed some light at some point during Q1 2017.