What happened
Insurance industry disruptor Lemonade (LMND 1.97%) was handily outperforming the market on Wednesday, with shares up by more than 7% as of 2:50 p.m. ET.
While some of that move was likely due to positive momentum in the broader tech sector -- the Nasdaq Composite was up by 1.5% at that point in the session -- investors also seem to be cheering a bit of company-specific news. Lemonade's auto insurance product, Lemonade Car, has rolled out in Oregon, making that state the fifth one where all of the company's insurance products are available to consumers.
So what
The launch of Lemonade Car in Oregon is important for a couple of reasons. For one, auto coverage is an essential form of insurance for millions of people (as opposed to life insurance, for example, which is mostly optional), and its average monthly auto premium is roughly 10 times that of Lemonade's core renters insurance product.
Second, the more insurance products Lemonade offers, the better its customer retention and ability to cross-sell will get. In its year-end 2022 letter to shareholders, the company said that in Illinois, where all of Lemonade's insurance products were available throughout 2022, its net dollar retention rate was 95%, as opposed to a rate of 86% for Lemonade as a whole.
Now what
To be sure, Lemonade is still very early in its much-anticipated auto insurance rollout. However, Lemonade Car is a big part of its investment thesis, so it's encouraging to see progress being made. Investors may want to keep an eye on whether the Oregon launch -- and, hopefully, launches in other states -- have noticeable impacts on the insurer's numbers later this year.
