Insurance startup Lemonade expands into Europe

Lemonade, the insurance company that’s raised $780 million, is today expanding into Europe with the launch of Lemonade in Germany.

As part of the launch, Lemonade is officially unveiling Policy 2.0, a simplified and easy-to-understand version of its renters and home owners insurance, to the European market.

Lemonade launched back in 2015 with a brand new take on insurance. Unlike other digital insurance brokers, Lemonade is a licensed insurance provider in its own right. But rather than calling around to get a quote from the big guys, Lemonade users interact with a chatbot via the app to get signed up for insurance. It takes less than five minutes to get covered.

Moreover, Lemonade believes that the business model of insurance is counterintuitive to good service. So Lemonade introduced a charitable component to their business. Lemonade takes its profit directly out of each monthly payment to Lemonade, and holds the rest for claims. At the end of the year, once claims are paid out (if there were any), the rest of the money goes to a charity of the user’s choice.

Lemonade CEO and founder Daniel Schreiber explained that insurance providers keep all the money that doesn’t go toward claims for their own profit. That means they’re less inclined to approve and pay out claims. The hope for Lemonade is that its business model aligns the company with its customers.

Policy 2.0 is an extension of that. Laws in the United States require that any insurance contract is approved by the regulatory powers that be. That means that even for a new insurance company like Lemonade, the contract is just as long and filled with legalese as any other insurance company.

So Lemonade introduced Policy 2.0 last year as an alternative to that. It’s an open source, crowd-sourced document aimed at making the rules around coverage as plain and simple to understand as possible. The startup is still working towards regulatory approval here in the States, but was able to move forward with Policy 2.0 in the European launch.

Unlike in the U.S. where insurance requires state-by-state approval, Lemonade’s license in Holland allows the company to operate across 28 countries in Europe.

“The value proposition we’ve created resonates with young consumers in a universal way,” said Schreiber. “Young consumers in Tokyo and Berlin and Tel Aviv and New York and SF all like interacting with chat bots, having zero hassle, and appreciate an unconflicted business model based on a charitable component. The new generation of consumers have that common denominator, in all those cities, where a tech brand is able to straddle countries and languages.”

All that said, Lemonade has some competition in Europe, from traditional insurance companies but also from other startups such as WeFox. WeFox, based right in Berlin, offers a similar product to Lemonade. In fact, Lemonade sued WeFox’s parent company ONE Insurance in 2018. The complaint alleged that WeFox had reverse-engineered the Lemonade app and copied many of its features. However, after a meeting between the two companies and an apology from WeFox chief Julian Teicke, with a promise to redesign the app, the lawsuit was dropped.

In March, WeFox raised $125 million.

In other words, it’s off to the races for Lemonade as it crosses the pond.