The partnership marks a significant development in Lemonade’s expansion strategy, particularly in the realm of auto insurance.
State filings reveal that Home State Insurance Group reported direct premiums totaling approximately $7.5 million for Lemonade auto insurance in 2023. This disclosure surpasses the threshold, indicating Lemonade Insurance Agency’s first reported collaboration with another insurance carrier entity.
Further corroborating this partnership, Lemonade’s annual statement disclosed that starting in December 2022, the company began assuming premiums related to car insurance policies written in Texas through a fronting arrangement with a third-party carrier based in the state.
The move aligns with Lemonade’s trajectory in the auto insurance sector. Lemonade Car, launched in November 2021, coincided with the acquisition of pay-per-mile insurer Metromile for $145 million in Lemonade stock. This strategic move bolstered Lemonade’s position, providing assets including over $155 million in cash, upwards of $110 million in premiums, and an insurance license operational in 49 states.
Despite being relatively new to the market, Lemonade Car has expanded its reach, operating in seven states: Arizona, Illinois, Ohio, Oregon, Tennessee, Texas, and Washington. CEO Daniel Schreiber highlights the significance of car insurance, noting that it contributed to approximately 15% of their total In-Force Premium (IFP) in 2023. He anticipates a similar contribution in 2024, reflecting the company’s confidence in the sector.
Notably, Lemonade is among 32 Managing General Agents (MGAs) conducting business with Home State Insurance Group, indicating a network of partnerships aimed at enhancing service offerings and market reach.
Speaking with Insurtech Insights recently about Lemonade’s strategy, CEO, Daniel Schreiber said: “Our path to profitability wasn’t just a promise; it was a tangible reality. Loss ratios were coming down, expense ratios were improving, and we shared statistics about the effectiveness of our lifetime value models.”
He added: “The biggest challenge in the first eight years of the company was seeing the plan come together, and now, the biggest gratification is no longer needing to sustain it with mere conviction and faith; we can point to the results and show that it’s reflecting itself in reality as well.”
