Popular insurtech firm Lemonade Inc (NYSE: LMND) saw its shares pop 9.6% on Monday as the SoftBank-backed company continues to benefit from the innovation it’s delivering in the insurance space.
One of the more prominent success stories for SoftBank CEO Masayoshi Son’s Vision Fund, Lemonade listed on the New York Stock Exchange at the beginning of July and promptly saw its shares surge 138% on the first day of trading.
In the Property & Casualty (P&C) insurance space, Lemonade’s unique business model means it keeps a flat premium fee of 25% up front. The remaining 75% of premiums is left available for claims, with any excess funds paid to charity.
What’s more, the company also uses artificial intelligence (AI) to streamline its business processes, with its customer acquisition costs purported to be significantly lower than its competitors.
With a market cap of only US$3.7 billion, investors can expect this stock to be a volatile holding (it’s still down around 30% from its recent high).
However, if Lemonade can continue to take market share from traditional insurance options in the home renters/homeowners space, then returns could be even sweeter over the long term.