Israeli-founded insurance tech firm Lemonade announced on Tuesday that it entered into a definitive agreement to buy US digital insurance platform MetroMile to boost its new auto insurance offering, a product the company announced just last week.
The acquisition deal — Lemonade’s first — is for an all-stock transaction on an equity value of approximately $500 million, or just over $200 million in cash. Under the terms of the transaction, Metromile shareholders will receive Lemonade common shares at a ratio of 19:1.
San Francisco-based MetroMile, founded in 2011, is a car insurance company that uses data science and AI to offer personalized insurance policies by the mile. MetroMile also licenses its technology platform to insurance companies around the world.
Lemonade made its first foray into the nearly $800 billion global car insurance market last week when it unveiled Lemonade Car, a new service that leverages telematics — a field that combines telecommunications and informatics — to measure how much people drive, and how safely they do so, to provide better rates for safe and low-mileage drivers, the company said. The app will also offer real-time crash detection, access to 24/7 roadside assistance, and the ability to dispatch emergency services.
Drivers of hybrid and electric vehicles (EVs) are set to get special discounts on their car insurance, as will existing users of Lemonade’s other insurance offerings.
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Lemonade co-founder and CEO Daniel Schreiber said in a statement that MetroMile has “been down this road billions of times, and their proprietary data and machine learning algorithms can vault us over the most time and cost-intensive parts of the journey. In a vast and competitive market like auto insurance, today’s deal is a huge unlock of value for our customers and shareholders.”
MetroMile CEO Dan Preston said “joining forces with Lemonade Car will create the most customer-centric, fair, and affordable car insurance, and is a great outcome for Metromile shareholders, who will benefit as shareholders of the combined company. It also means that now, homeowners, renters, and drivers alike can have all of their insurance needs with a single company that truly has their best interests at heart.”
An illustrative photo of a driver on an open road. (anyaberkut, iStock by Getty Images)
Lemonade has been making waves in the traditional insurance industry since 2015 when it was founded in Tel Aviv by Schreiber and Shai Wininger, also a co-founder of Fiverr. The company uses technology such as artificial intelligence and chatbots, as well as behavioral economics, to deliver affordable homeowners, renters, life, and pet insurance across the US, all via a mobile app. Some of its offerings are also available in Germany, the Netherlands, and France.
Lemonade claims its simplified claims process and rates — it offers renters insurance starting at $5 per month, and homeowners insurance starting at $25 per month — resonates strongly with younger consumers. It also runs a charity element called the GiveBack program, where its users select a non-profit organization they care about and, once a year, Lemonade tallies up unclaimed money pooled from policyholders who chose that same cause and donates it to the organization. The program was featured in TIME magazine’s 100 best inventions in 2019.
With Lemonade Car, the company said it aims to provide better rates based on how consumers drive.
“The target audience is anyone underserved by the current car …….
Source: https://www.timesofisrael.com/lemonade-buys-us-data-science-firm-to-boost-car-insurance-offering/