Lemonade's (LMND 1.65%)recent announcement that it was offering auto insurance in Illinois garnered plenty of attention from existing and potential investors. What implications could this development have for the company's long-term growth story? In this segment of Backstage Pass, recorded on Nov. 3, Fool contributors Trevor Jennewine and Brian Withers explain.
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Trevor Jennewine: All right, let's see here. It looks like there's another question there from GodalGuru, who says: "Lemonade announced a car insurance program for Illinois today, and that pushed the stock up about 12% this morning. It's good news, but what are the long-term implications?"
Yes, Lemonade Car did launch in Illinois, and the company also said that it's going to expand sales into other states in the near future. I'm a Lemonade shareholder -- I'm not sure if either of you are -- but I think that this does have positive implications long term for the company. It expands their market opportunity by about $300 billion, I want to say, is the figure management quoted.
Maybe more importantly, a lot of insurers bundle products like home insurance policies and auto insurance policies together. That's a way of simplifying the process. Lemonade hasn't been able to do that until now.
Management estimates that its existing customer base across products like homeowners policies, renters, and pet insurance spend $1 billion on car insurance, so I think the cross-sell opportunities are significant. As a shareholder, I'm excited. Do either of you guys have any thoughts on this?
Brian Withers: Yeah Trevor, I want to tag onto that. I saw the stock up today and wasn't really sure why. This totally makes sense. This is something that Lemonade shareholders have been waiting for. Management wouldn't release a date because it was beyond their control. It was ready, but they had to go state by state regulation. It could be any one of the 50 states, but they have one state, and so they broke the glass ceiling there. There'll be more to come, I'm sure.