Lemonade reported a net loss of $62.4mn for the first quarter 2025, up from $47.3mn in the same period last year.
The increase was primarily due to losses linked to the January wildfires in Los Angeles and a $6.9mn assessment from the California FAIR Plan, the state’s insurtech of last resort.
Operating expenses, excluding net loss and loss adjustment expenses, rose 29% to $127.2mn. This was driven by the FAIR Plan assessment and increased spending on customer acquisition.
The company estimated the wildfires’ total negative impact at approximately $22mn, according to a shareholder letter.
Net earned premium grew to $104.3mn, compared to $84.4mn a year ago. However, the net loss ratio deteriorated by 15 points, reaching 93.
Lemonade surpassed $1bn in in-force premium in March, roughly eight and a half years after issuing its first policy.
Its automobile insurance business showed stronger momentum, with sequential in-force premium growth exceeding the rest of the portfolio. The company recently launched auto coverage in Colorado and now offers it across more than 40% of the U.S. market.
The company filed 24 rate and coverage changes in the first quarter, following 29 filings in the prior year. Lemonade said early results in auto indicate progress.
Its AI identifies young, safe drivers effectively and delivers competitive pricing, with broad adoption of telematics and continuous driving data contributing to underwriting decisions.
Lemonade has started using telematics data near the point-of-sale. In states where this feature is active, conversion rates increased by about 60%.
Despite the early growth, the auto segment’s aggregate loss ratio remains above the company’s target.
Lemonade attributed this to the low average tenure of policyholders, noting that loss ratios typically improve significantly after the first renewal.
The company is monitoring the potential impact of new U.S. tariffs and inflation, and stated it would raise rates if needed to maintain appropriate pricing.
Sales and marketing expenses, which include fourth-quarter growth spending, rose to $36mn from $13.4mn a year earlier.
