Lemonade is capitalizing on the burgeoning pet insurance market in the US
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US-based insurtech unicorn Lemonade is set to add pet insurance to its existing offering of homeowners and renters insurance, according to TechCrunch.
Lemonade is currently going through the regulatory process to be able to offer the new policy, and its CEO Daniel Schreiber told TechCrunch that it could take months before the product launches.
While not many details have been disclosed, the policies reportedly will exclusively cover cats and dogs. Additionally, Lemonade's existing chatbots will be part of the new offering, as well as the insurtech's usual charitable contribution feature. Consumers are currently able to sign up for early access via Lemonade's website.
It makes sense for Lemonade to offer pet insurance. Not only is there a large addressable market for pet insurance, but Lemonade already has existing relationships with many pet owners who may be underserved. Only around 2% of pet owners currently have pet insurance, however 70% of Lemonade customers have pets, per Schreiber.
This gives the insurtech access to a large addressable market and a strong cross-selling opportunity among its current users. To further boost uptake, Lemonade could give its customers incentives and discounts to take out a pet insurance policy.
Additionally, the pet insurance market is growing, as consumers are willing to spend more on their furry friends. In 2018, the gross written premiums in the US and Canada for pet health insurance reached $1.42 billion, up from $1.15 billion the year before. There were also 2.43 million insured pets in the region at the end of 2018, up 17% from 2017.
This can likely be linked to consumers being willing to spend more money on their pets, with pet care spending hitting a record-breaking high of nearly $73 billion in 2018 - and it's estimated to reach over $75 billion in 2019, per the American Pet Products Association.
With its forthcoming pet insurance, Lemonade joins a number of insurtechs that are broadening their product suites, which will help them compete head-on with legacy players. US-based insurtech Root, for example, recently moved into homeowners and renters insurance, expanding from its initial focus on auto insurance.
These insurtechs are already competing with legacy players in a sense that they operate as carriers, meaning that they are fully licensed and don't need incumbent insurers to underwrite their policies. Offering a range of insurance products makes insurtechs even stronger competitors to legacy insurers, as the latter are no longer the only players in the industry to provide and underwrite a variety of coverage within their platforms.
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