GlobalData’s survey revealed that 69% of respondents drive less annually due to the pandemic

Lemonade has a “substantial opportunity” to capitalise on the motor insurance market post-pandemic, according to data and analytics firm GlobalData.

With GlobalData citing the US motor market being worth $35,815m in gross written premium (GWP) in 2020, the insurtech’s model - which is designed to be both digital and centre around value - is well suited to capitalise on this opportunity.

Ben Carey-Evans, insurance analyst at GlobalData, said: “The US market is relatively competitive for digital and telematics-based motor insurance. Recent years have seen companies such as Root and Metromile receive vast amounts of funding in this area, making them both insurtech unicorns.”

This follows Lemonade announcing earlier this month that it will be entering the car insurance market. 

Upselling opportunity

Meanwhile, GlobalData’s UK Insurance Consumer Survey found that a more flexible and digital motor insurance policy, like the one that Lemonade is likely to offer, could be even more relevant in the wake of the Covid-19 pandemic.

It revealed that more than two-thirds (69.4%) of respondents said they would drive less miles annually due to the pandemic.

Therefore, consumers could benefit from the pay-per-mile insurance policies that By Miles and Metromile offer, as both value and flexibility will become essential.

Carey-Evans added: “Lemonade will be bringing a wide range of digital expertise and very strong customer service skills to the market.

”The launch of Lemonade Car is at [its] early stages and although it hasn’t released a lot of detail yet, it has promised to provide instant claims and value, while also focusing on electric vehicles.

“It looks like a strong upselling opportunity for Lemonade, a company that primarily sells quick and digital household policies to its customers.”

Brand awareness is key

The consumer survey also highlighted that only 7% of UK consumers had heard of Lemonade. This is not an issue at present because the company is launching in the US, but it has made its intentions to move into Europe very clear over the last couple of years, with the insurtech selling household insurance in Germany, France and the Netherlands.

Brand awareness will be key as the insurtech looks to challenge established players in the market. However, significant backing makes that an obstacle it can overcome with marketing, as its digital expertise should prove popular, noted GlobalData.