What Lemonade’s Post-IPO Run Tells Us About the Future of Insurance and Technology
Born in the 80s, I knew a world before the internet. We had to wait patiently for a new song to play on the radio before trying to record it on a cassette, or scour books to research questions (and then actually remember the answer). Now, if a webpage is just a few milliseconds too slow to load, or a customer gets asked to re-email a file they've already submitted, they move on to the next option.
Speed and efficiency count. Lemonade (ticker: LMND) promises policies and claim payouts in minutes for home and renter's insurance. Metromile has similar offerings and ease of use for auto insurance, with policies that charge by the mile driven.
Shares of four year old insurtech Lemonade have more than tripled its $29 IPO price in just three days of trading. Still less than $5 billion in market cap, it pales in size to some larger competitors, but is sending clear signals on what the future of insurance will look like. The clear answer: consumers are impatient and technology matters.
While some customers may like the comfort and convenience of the same agents and carriers for years, younger consumers prefer speed, ease of use, and technological efficiency. Despite stated intentions and desires to improve their offerings, bigger insurance players have been slower to adapt. This makes sense, the larger the organization, the more challenging, time-consuming, and expensive widespread changes become. Startups can implement a new software product, or change a business practice, in hours or days, not months or years.
Phone calls to companies are associated with endless waits and being passed from one agent to another. Chat support is winning the day, including automated communications that are actually helpful. Consumers still desire support from a real person when they need it, not an endless loop of automated responses.
We’ll see if Lemonade spurs the big incumbent players to adapt, or paves the way for more startups to enter the marketplace. Either way, the technological shift adapting to consumer preferences for efficiency, ease of use, and good support in insurance is undeniable, and Lemonade should continue to drive that change.
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