Lemonade Inc., an insurtech company, recently reported a data breach affecting around 190,000 applicants for its auto insurance. The breach was linked to a technical issue in the company’s quoting system, which inadvertently shared personal data, including driver’s license numbers, with a third-party provider.
The company disclosed this incident in a filing with the U.S. Securities and Exchange Commission. They explained that the breach happened when certain personal information was mistakenly transmitted without the usual protections in place. Lemonade attributed the issue to a flaw in its car insurance quote process.
Despite the breach, Lemonade reassured its customers that it does not believe its core operations were compromised and emphasized that customer data was not specifically targeted. The company has since implemented corrective measures to fix the vulnerability.
This incident comes at a time when auto insurance quoting activity is on the rise, partly due to increasing insurance rates. Progressive Corp.’s CEO noted a significant uptick in consumer interest in personal auto insurance.
In addition to this breach, the insurance industry has faced other cybersecurity challenges. Just last month, New York Attorney General Letitia James announced penalties against Root Insurance for failing to protect the personal information of about 45,000 residents. Similarly, Noblr auto insurance reached a $500,000 settlement for exposing data of over 80,000 New Yorkers due to inadequate security.
Lemonade is also expanding its auto insurance offerings while ramping up marketing efforts. In the last quarter of 2024, the company reported a dramatic increase in marketing expenses, rising from $13.4 million to $36 million compared to the same period the previous year. They are focusing on using artificial intelligence to improve their marketing efficiency.
As the industry grapples with these data security issues, Lemonade’s recent breach highlights the ongoing challenges faced by insurance companies in protecting consumer information.