US insurtech giant Lemonade has expanded into Europe in a move that should worry home insurers across the continent. Its contents and liability policies are now available in Germany, backed by a multi-year reinsurance deal with AXA, but greater competition may make establishing a foothold in the region a tricky task.
With $480m in funding to date and a valuation of £2bn ($2.55bn), Lemonade has enjoyed great success through its digital-savvy home and renters insurance policies, which specifically target millennials. It offers 60-second quotes and three-minute payouts, while its Lemonade 2.0 policy maintains simplicity by ensuring all industry jargon is removed.
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Its certified status as a “B Corporation,” attained through its commitment to social good, ensures it stands out from competitors. It takes a flat fee from premiums paid and, if there are fewer claims made than expected, any funds leftover are allocated to good causes chosen by the customer.
While Lemonade is at the forefront of digital insurance, it is likely to face more competition in Europe than it has done in the US, where the insurtech theme is less developed. UK-based companies such as Homelyfe, Buzzmove, and Urban Jungle all explicitly target millennials with instant, digital home policies. Urban Jungle is arguably the most similar to Lemonade, as it specifically targets renters with a home rental policy. Buzzmove, on the other hand, combines a removals company with a home insurance broker. Once it tracks everything during the moving process on its digital inventory, it provides instant and accurate contents insurance quotes, which can be purchased on its app.
Lemonade will have to contend with competition within Germany before it can continue its expansion across the rest of Europe. Clark is one of the most established insurtechs in the country having raised $29m in funding, and it is essentially a modern broker. It analyses all policies and works out where a customer is underinsured. It also has partnerships with challenger banks, such as N26, through which it links to sell home insurance. The German market is already used to the sort of digital, simple insurance that Lemonade provides, so it may find it harder to stand out than it has done in the US.
However, Lemonade comes with a big reputation, a strong product, and the potentially defining support of AXA, so it is likely to have a significant impact on the European market in the coming years.
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