Please ensure Javascript is enabled for purposes of website accessibility

Lemonade Just Announced a New $300 Billion Growth Opportunity

By Matthew Frankel, CFP® - Apr 20, 2021 at 9:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Here's the latest market that the insurance disruptor is entering, and why it could have an immediate impact.

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.

Person driving a car.

Image source: Getty Images.

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.

Matthew Frankel, CFP owns shares of Lemonade, Inc. The Motley Fool owns shares of and recommends Lemonade, Inc. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Lemonade, Inc. Stock Quote
Lemonade, Inc.
LMND
$25.62 (-9.84%) $-2.79

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
397%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.