Insurance disruptor Lemonade (LMND -9.84%) announced a major expansion of its business today. The company, which primarily sells renters, homeowners, and pet insurance, added term life insurance earlier this year. Now, Lemonade is expanding into auto insurance, which could be a huge growth driver over the next few years.
Lemonade announced that it plans to launch its Lemonade Car auto insurance platform by the end of the year, and early registration for interested customers is now live on the company's website.
Why is Lemonade launching car insurance so soon?
Lemonade just recently launched life insurance earlier this year, and that is a big addressable market all by itself. So it might seem odd that the company is jumping into another insurance market already.
There are two main reasons. First, auto insurance is a massive addressable market. In the United States alone, it is estimated to be a $300 billion industry, roughly 70 times the size of Lemonade's core renters and pet insurance markets.
Second, Lemonade's customers want to buy their auto insurance through the company. The easy process of buying renters, homeowner, or pet insurance, as well as the company's quick claims process, have been a massive hit. Lemonade reached the 1 million customer milestone in a fraction of the time of most of its larger peers.
As chief operating officer Shai Wininger said, "We're seeing an overwhelming demand for a Lemonade car insurance product from our customers." The company estimates that its existing customer base spends about $1 billion on car insurance each year, so this product has the potential to have an immediate and game-changing impact on the company's revenue.
Lemonade's auto insurance product will use the company's proprietary artificial intelligence to handle emergencies and process claims. It also says that the product will be "especially attractive" to drivers of electric vehicles and other environmentally friendly cars.