Over the past few years, several technology-focused insurance disruptors have come on to the public markets, but Lemonade (LMND +15.92%) is emerging as a winner in the space. In this Fool Live video clip, recorded Nov. 29, Lemonade's co-CEO and co-founder Daniel Schreiber sits down with Fool.com contributor Matt Frankel to discuss how Lemonade plans to maintain its competitive advantage.
Matt Frankel: I mentioned earlier that the insurance business has taken decades to disrupt. But now that we're getting there, you're not the first only company doing this, there are other tech-focused insurance companies out there, you're acquiring one of them, which we'll get to in a little bit. But what makes Lemonade different from all of these other insurance tech companies that have sprung up over the past few years?
Daniel Schreiber: I have to say that I'm continuously surprised by how few there are, given how encumbered the incumbents are and how big the prize is at the end of the rainbow, you'd have thought that there'd be a lot more people fighting this good fight. That's some relief that the competitive landscape actually hasn't developed all that aggressively.
When we launched Lemonade we kept looking over our shoulder expecting there to be a hoard of other start-ups chasing us down and that never fully materialized. If you think about in the life insurance space, you can name one or two companies, you could probably name Ladder Life, maybe Ethos, you'd struggle to name a third. In the home insurance space you'd name Hippo and you'd stop, you wouldn't name a second. In the car insurance space after we acquire Metromile, there's one left, it's Root. In the health space you'd name Oscar, it's really slim pickings.
But I'd say two or three things in direct answer to your question. One is that this is such a stunningly big marketplace that we wish all of the other insuretechs tremendous success. Our success is not dependent on their failure, they can be hugely successful and that really doesn't impinge on our potential at all. We wish them well, we are really combating the incumbency which is so huge, trillions of dollars, that's where I'm focused, not on other insuretechs. But there are other significant differences between us and the other insurers. I think the most striking one ties back to what I said earlier about our strategy of acquiring customers young and then growing with them, all of the other insuretechs that I just listed and that I can think of, are monoline businesses. They do just life insurance, just home insurance, just car insurance, which means that they are this pure play in a single line.
We don't know how you make that successful, at least we didn't want to fight that fight because customers tend to buy multiple products from the same insurance company, and we see that today with our homeowners insurance, the inability until recently to offer car as a bundle meant that we were operating in that space with one hand tied behind our back because we were sending consumers off to State Farm to get their car insurance and State Farm quickly offered them a bundle and you'd see some churn through that. The pure plays and everybody else in this marketplace is a pure play is a strategy that we struggle to understand, and I wish them well, I'm sure they'll make the most of it, but hard for me to see how you make a success as a pure-play company in this space.
