The insurer is seeking to use the acquisition of the US firm to boost its auto policy offering.
The Lemonade insurance company founded in Israel has announced that it has entered into a definitive acquisition agreement to purchase US the MetroMile data science firm, for the purpose of enhancing its auto policy offering.
The acquisition of MetroMile represents the company’s first deal of this nature.
Lemonade insurance made the acquisition deal in an all-stock transaction on equity value of $500 million, which equates to about slightly more than $200 million in cash. The acquisition’s terms will give MetroMile shareholders Lemonade common shares at a 19:1 ratio.
MetroMile was founded in 2011 and is based in San Francisco. It is an auto insurer using artificial intelligence and data science to offer its policyholders personalized coverage by the mile. The company also licenses its tech platform to insurers worldwide.
Lemonade insurance expanded into auto coverage for the first time earlier this month.
The company announced its first steps into auto insurance when it unveiled Lemonade Car. That service uses telematics to use real world driving data from each individual policyholder to help determine the premiums that are paid. That way, lower-mileage and safer drivers will pay better rates to reflect their actual driving habits. Several major insurers in the United States have rolled out their own programs using telematics over the last handful of years.
That said, in this case, the company’s app isn’t meant exclusively for collecting telematic data to determine premiums. Instead, it also offers real-time crash detection, the ability to dispatch emergency services, and even access to 24/7 roadside assistance.
Hybrid and electric vehicle (EV) owners will also be able to benefit from special premium discounts as will existing customers who already have coverage through the insurer’s other products.
Daniel Schreiber, Lemonade insurance co-founder and CEO, released a statement, saying that MetroMile had “been down this road billions of times, and their proprietary data and machine learning algorithms can vault us over the most time and cost-intensive parts of the journey. In a vast and competitive market like auto insurance, today’s deal is a huge unlock of value for our customers and shareholders.”