Founded in 2015, Lemonade primarily uses big data and AI to sell home and pet insurance. Metromile, founded in 2011, is on its third generation of machine learning models that leverage telematics data to predict risk. Lemonade launched its auto insurance product, Lemonade Car, just last week. Metromile’s data and AI models can give Lemonade’s new product more precise pricing. “Ten years ago, Metromile pioneered the use of continuous real-world data feeds to derive high fidelity predictions for losses per mile driven,” Lemonade CEO Daniel Schreiber wrote in a blog post. “It is this decade-long head start, in combination with the Lemonade tech stack, that holds the promise of boosting Lemonade Car to the vanguard of car insurance.” Lemonade also stands to gain from Metromile’s 49 state licenses, over $100 million of seasoned in-force premium (IFP), and over $250 million of cash on the balance sheet. The transaction is expected to close during Q2 2022, once all regulatory approvals have been secured. The transaction requires the approval of Metromile stockholders and is subject to other customary closing conditions. Under the terms of the deal, Metromile shareholders will receive Lemonade common shares at a ratio of 19:1. Lemonade went public last year as a Certified B-Corp, meaning it gives unused premiums to nonprofits. The company came under fire earlier this year after it acknowledged – and boasted – that it uses controversial facial recognition technology to flag some claims and said it “may reduce fraud” because people are “less prone to lying” when looking at themselves.
