Lemonade adds Bestow's AI-powered life insurance in cross-selling move

  • Lemonade has added Bestow’s term life insurance coverage with fast underwriting to its platform.
  • This suggests that it may seek more like-minded partners to quickly expand into other insurance verticals. 
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Lemonade, which offers home, renters, and pet insurance, has added fellow insurtech Bestow’s term life insurance coverage to its platform, per PR Newswire.

Bestow’s Protect API enables partner insurers to integrate its AI-powered underwriting—which assesses a customer’s application information along with external data, such as prescription and financial history—to offer coverage in minutes and without a doctor’s visit. Lemonade’s AI-enabled chatbot, Maya, will guide users through the application process.

Bestow’s cheap and online underwriting process will help Lemonade’s latest offering stand out from traditional term life coverage. Despite pandemic health fears, US consumers are no more motivated to take out life insurance than they were last year, citing unaffordability and the complexity of the application process as main barriers—highlighting the inadequacy of existing options.

By contrast, Bestow’s coverage starts at $8 per month, compared with the $15 national average. And with most consumers confined at home amid the pandemic, its entirely digital process is far more convenient than physically going to a branch.

The integration suggests Lemonade may pursue partnerships from now on to stake a claim in other insurance sectors and boost cross-selling opportunities.

  • Lemonade may increasingly seek like-minded partners to accelerate its expansion. Lemonade previously focused on in-house developments: It sells its own insurance policies for home, renters, and pet insurance coverage. However, it stated in its Q3 earnings that it wouldn’t underwrite term life policies, but would rather simply extend its technology—here, its chatbot—to the new offering. This is a lower-cost and more straightforward method than building in-house. Moving forward, Lemonade will likely take the same approach to quickly add new insurance verticals, partnering with other forward-looking insurtechs that also focus on AI-enabled insurance for better-priced products.
  • And following this partnership model will bring Lemonade closer to being a one-stop shop for all insurance needs. The insurtech added pet insurance in Q3, enabling it to cross-sell to existing customers and increase their premiums. Among those who added pet policies, the premium per Lemonade customer—how much each customer pays divided by the number of customers—nearly quadrupled, per its Q3 earnings. This latest integration will help Lemonade further increase each customer’s premium earned, as the lifecycle events that involve moving from renting to homeownership and getting a pet often coincide with consumers starting to think about life insurance in their mid-30s. And it will likely assess future partners for the same cross-selling benefits.

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