Lemonade’s UK arm drives European growth

Insurtech Lemonade has revealed that the UK has become its “largest customer base in Europe”.

In a letter to shareholders about its Q4 2023 results, the firm said its UK business had been growing quickly since launching in October 2022.

The insurtech launched in the UK market with the help of Aviva, which has been acting as a long-term strategic partner.

”Our European business made solid strides in 2023, with increasingly healthy loss ratios and profitable unit economics and the launch of the UK market,” its letter stated.

“This quickly became our largest customer base in Europe.”

Europe

The insurtech also stated that its entire Europe business had “come of age”, with it securing more customers in Q4 2023.

As well as the UK, its European arm also includes Germany, the Netherlands and France.

In Q4, about 30% of Lemonade’s net-new customers came from its European business, compared to 3% 18 months ago.

But while the European business is continuing to grow, Lemonade said it was ”still dwarfed by the US book”.

”The US still adds far more new customers,” the insurtech said.

However, it said that given its size meant it had a ”higher absolute numbers of churn”, net-new customer additions in Europe were closing in on those in the US.

Overall picture

Overall, Lemonade revealed active premiums grew by 20% year-on-year to $747m (£590.8m).

It also reduced its gross loss ratio to 77%, a 12 point improvement year-on-year.

The insurtech said its growth came despite 2023 being a year of “extraordinary challenges in the insurance world”.

“[This includes] the hardest reinsurance market in decades, some of the worst winter storms on record and combined ratios above 100 throughout the industry,” it added.

“Several of the largest insurers in the US pulled out of some of its largest states – an unprecedented sign of distress.

”Turning to 2024, there’s reason to be hopeful that many of the industry’s headwinds of ’22-’23 may turn into tailwinds in ’24-’25.

“Inflation seems to be receding, new rate approvals are adding up and earning in and if the costs of capital come down, we may yet see a moderation in reinsurance costs too.”

• Insurance Times has converted dollar amounts into pounds using an exchange rate of $1.27 = £1, which was correct as of 1 February 2024.