While Allstate’s CEO Tom Wilson named GEICO and Progressive when asked about the ability to grow auto insurance in 2025 as competitors do the same, no one on Allstate or Progressive’s earning calls addressed competition from Lemonade.

The InsurTech announced the launch of Lemonade Car in the state of Colorado this week, at the same time as the company announced a significant milestone in its history—surpassing $1 billion in in force premiums across all lines. In force premium is a measure of annualized premiums that the InsurTech tracks on a regular basis. During a fourth-quarter earnings conference call in late February, Lemonade executives guided toward $1.2 billion of in force premiums by year-end 2025, or a 28 percent jump over last year.

Lemonade Car will play a key role in the company’s accelerating growth plan, which will explode the level of in force premiums to $10 billion within roughly the same time frame it took Lemonade to get to $1 billion, executives said an Investor Day event in November last year. They also noted that car insurance would represent 40 percent—$4 billion of the $10 billion total premiums—when they get there by 2035.

“We reached this [$1 billion] milestone 8.5 years after launch (<10 years from founding). For context: incumbents like Allstate, Farmers, GEICO, Liberty Mutual, Progressive, State Farm, and USAA each took 40-60 years to reach the equivalent figure (inflation adjusted),” wrote Lemonade Chief Executive Officer Daniel Schreiber in a LinkedIn post on Tuesday, celebrating Lemonade’s entrance to the “Tres Comma Club.”

Ambitiously, the post refers to the possibility that Lemonade Car will someday help drive the company toward “Cuatro Commas.”

For now, however, Lemonade’s launch of car insurance in Colorado brings Lemonade’s availability to roughly 40 percent of the U.S. car insurance market. “Coloradans spend about $7 billion on car insurance annually, with Lemonade’s existing Colorado customers spending hundreds of millions a year on car insurance, making the state a promising market for Lemonade Car,” the announcement said.

Still hundreds of millions are a fraction of a U.S. market where Progressive and GEICO wrote $60.9 billion and $42.9 billion in net premiums across the nation last year. And while Lemonade executives used part of the Investor Day and fourth-quarter earnings calls to express their attraction 10X-ing the overall business, they also stressed the need for restraint on auto insurance as they move ahead.

“We’ve seen a tremendous amount of pent-up demand for our car product,” Schreiber said during a February earnings conference call, responding to an analyst who wanted to know more how Lemonade is responding to 700,000 customers the company previously said were on a waitlist for Lemonade Car insurance.

During last year’s Investor Day, Chief Business Officer Maya Prosor presented the figure, noting that the 700,000 customers had signed up for car insurance in places Lemonade was not yet offering the product. “These are customers on a waitlist for car insurance, not the latest drop of Air Jordans,” she said.

Providing an update during the February earnings call, Schreiber and President Shai Wininger said the company has been testing different ways accelerate growth by converting 2 million existing customers for other products, along with the waitlisted prospects. “The early results have been nothing short of stunning,” Schreiber said.

“But before we unleash rapid growth, we have to make sure that everything is solid,” he added.

“We’ve seen car growth run away from companies that haven’t got all the foundations in place. We’re keen to not let that happen to us and therefore we are being restrained in that sense.”

“The engines are revving, but we’re not putting it into first gear fully quite yet,” he stated.

Wininger sounded a bit more bullish when he responded to a set of questions about the go-to-market strategy for car insurance. “The essence of our growth strategy is that our best-in-class first-party data will enable us to offer unbeatable prices for the customers we want. And it is absolutely true that we possess a structural tailwind in the form of our waitlist and well over 2 million active customers. We expect this will enable us to grow the car business with efficiency levels unavailable to our competitors,” he said.

He added that Lemonade expects to “begin ramping up” the process of adding states considerably throughout 2025 and 2026.

“Rest assured that we love growth and will leave no stone unturned in our pursuit of sustained acceleration,” he said. “Similarly, rest assured that we will continue to do so in a long-term profitable manner,” he concluded.

His statements about converting customers dovetailed with Prosor’s Investor Day presentation last year. Setting out the road map for growing car insurance at Lemonade, she stressed the idea of leveraging cross-sales from existing renters and pet insurance customers under age 35 and the next generation of insurance buyers.

Like GEICO, she said that Lemonade believes an “attractive selling proposition” is one that centers around value and savings, but that Lemonade aims to attract their preferred customers without spending billions on advertising or introducing a cute mascot.

“We are not going to compete head-on with a GEICO or Progressive or State Farm on ad spend and hope to outplay them at the game they play so very, very well,” Schreiber reiterated during the late February earnings call. He was responding to analyst who worried that the company is not taking advantage of consumer shopping behavior in 2025 by not “pushing the growth pedal on the car front right now,” while incumbents invest heavily in growth.

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“The way we win is by doing things differently,” Schreiber said. Identifying the first key difference, he said, “We are not a car-first insurance company. So, we now have approaching 2.5 million customers—and that’s growing fast—most of whom need to buy car insurance and to whom we can sell car insurance with no incremental spend,” he said, indicating that upsell and cross-sell testing has been active over the last few quarters.

“The second avenue of growth is going to be getting to the customers that we want at a price others cannot reach,” he said, referencing Lemonade’s telematics programs. This involves “squaring some pretty tricky circles” to give customers “the price they want at the moment of conversion even before they’ve driven for you,” he said, referring to weeks- or month-long tests that insurers require for telematics programs. “It is here that we’ve been doing a series of really interesting and very, very encouraging experiments that will allow us to unleash this growth too over time,” he stated.

During an Investor Day presentation last year, the CEO spoke about “using all of a trillion data points” amassed by Metromile, which Lemonade acquired in 2022. That data, extending back to 2013, reveals that two-thirds of drivers are low-risk drivers, who are entitled to pay premiums that are 15 percent lower than they’re paying today, Schreiber asserted.

Related article: Reporter’s Notebook: ‘Nobody Else Does Telematics,’ Lemonade Exec Says

More recently, explaining the current strategy to the analyst worried about missing the opportunity to grow right now, he said, “We could just spend our way into competing headlong with the incumbents. That’s not what we want to do. The reason that we’re taking extra few months, extra few quarters to get the pricing, the filings, the messaging, the advertising, everything just so is that when we do unleash it, we’ll be able to grow it effectively in a profitable way that…side steps where the whole rest of the industry is operating,” he promised.

Agreeing that auto insurance customers may well be shopping in 2025, he said, “This is one of the most shopped categories in the world. They will be shopping this year, and they’ll be shopping next year. They’ll be shopping every year.”

“And we are growing car this year, don’t get me wrong. It is growing, but it is growing while we are still experimenting and finding the absolute best formulas.”

“When we feel greater confidence, you’ll see us take off at a much faster rate. But not beforehand.”

Offering a financial officer’s perspective to address a question about growth and profitability, CFO Tim Bixby said, “We’re in the process now of shifting from car as a declining business in terms of customer count, but a very stable business in terms of in force premium, to a point now where our loss ratios have come down significantly over the past year. It’s not quite at our target, but it’s getting awfully close.”

“Over the course of 2025, we’ll continue to see that shift from a somewhat declining rate of customer count and stable IFP to a growing customer count as loss ratio continues to improve,” he said.

Looking out into the future, Bixby confirmed the longer-term multiyear plan is to have car represent roughly 40 percent of Lemonade’s total book of business—less than half. “At that time, it would be still a very small part of what…is a competitive market,” he said.

Featured image: AI-generated (Adobe Firefly)