Will drivers allow an insurance company to track their every move?
Lemonade thinks so, and on Wednesday the firm added auto insurance to its portfolio of existing renter, home, pet, and life policies. The twist: it will set rates by detailing drivers’ quick starts, short stops, and hard turns through satellite tracking.
Pedal to the Meddle
Lemonade, which started publicly trading last year, intends to build its car insurance offering around telematics, a GPS technology that monitors drivers on the road through smartphone apps or devices in their cars.
Lemonade will keep tabs on hard braking, speeding, hours of travel, distances driven, and, possibly, distracted driving. These factors — rather than traditional credit scores, age, or gender — will be used to set individual insurance rates. It’s already available in Illinois, and will soon be rolled out to other states.
Whether or not consumers will drink up remains to be seen, but it’s clear why Lemonade wants a piece of the $288.4 billion US auto insurance market:
- After lifting off last year when it was a buzzy pick among Reddit traders, Lemonade’s stock has fizzled in 2021, falling over 40%.
- In the second quarter, Lemonade lost $55.6 million, more than double a $21 million loss one year earlier, as marketing, tech, sales, and administrative costs devoured its bottom line.
Rough Road Ahead? Lemonade cautioned in a recent SEC filing that it has a “history of losses and we may not achieve or maintain profitability in the future.”