Lemonade Inc, a tech-driven insurance startup that promises renters and homeowners insurance in as little as 90 seconds and payment of claims in 3 minutes, has won approval from California regulators to sell policies in the state, the company said.
The insurer's foray into California, the most populous U.S. state, comes amid the company's push to become licensed nationwide, less than a year after launching in New York. Last month, Lemonade, which sells policies directly to consumers through its website and smartphone app, expanded into Illinois.
Lemonade, whose policies become available in California on Wednesday, is seen by the industry as a "disruptor," or a company that stands to upend how consumers have traditionally done business.
The insurer is part of a broader movement among financial and technology or "fintech" companies that are trying to disrupt longstanding business models.
Fintech ventures typically leverage technology, such as cloud data storage or smartphones, to provide cheap and easy-to-access services such as loans, insurance, payments, money transfers, stock trading.
In the first quarter this year, venture-backed fintech companies in the United States raised $1.1 billion, an 8 percent drop from the previous quarter and down 39 percent from the same period a year ago, according to venture capital database CB Insights.
"This is huge for us," said Lemonade Chief Executive Officer Daniel Schreiber. "California is one of the biggest prizes."
The state is the third-largest U.S. market for homeowners coverage, with insurers collecting $7.46 billion in premiums for 2015, according to the Insurance Information Institute (III). Florida is the largest homeowners insurance market with $8.77 billion in premiums collected, followed by Texas ($7.99 billion), according to III.
Schreiber declined to comment on the amount of premiums Lemonade has written to date.
Lemonade has raised a total of $60 million in capital during its first year, including a new investment from Sound Ventures, the investment firm of actor Ashton Kutcher and talent manager Guy Oseary. Last month, Allianz SE said it was also backing the company but declined to disclose the amount of its stake.
Other backers include Sequoia Capital, GV, General Catalyst and Aleph.
(Reporting by Suzanne Barlyn in New York; Editing by Matthew Lewis)