Case Study on Lemonade: An Insuretech Company
By: Kanak Purohit & Anshika Sah
Introduction
Lemonade is an Insuretech company that offers insurance services to its customers using AI and behavioral economics. The company prides itself on making the insurance process faster, more transparent, and affordable. By replacing brokers and bureaucracy with bots and machine learning, Lemonade promises zero paperwork and instant everything. The up-to-date technology allows Lemonade to provide personally curated and immediate insurance quotations to its customers and also process these claims instantly.
How is lemonade replacing brokers and paperwork with bots and algorithms?
One of the key ways through which Lemonade provides a faster and more transparent insurance experience to its customers is through the use of chatbots. Lemonade’s AI-powered chatbot called Maya greets the person whenever a customer interacts with their app or website. Maya uses NLP, or Natural Language Processing, to provide an immediate response to customer inquiries. Maya also helps their customers guide through the insurance process, file claims, choose appropriate coverage, and answer questions about policy terms.
Additionally, using technology for its underwriting process is another key that enabled the company to remove paperwork and brokers. As a customer applies for any policy, Lemonade’s algorithm system analyzes the data to determine risk and calculate an approximate and appropriate premium. As this process has also been automated, the need for human brokers to manually underwrite policies has been removed.
Another key method is using algorithms of machine learning to process claims. Lemonade’s machine learning algorithm analyses a customer’s claim as and when filed to determine whether it’s eligible for payment or not. The process here becomes much faster by deploying these techniques rather than going the traditional way, which involves humans doing a manual review of claims, which makes the process long and tedious. The company’s algorithms are designed as such to identify potentially fraudulent claims. This helps in reducing fraud and keeping the premium of the insurance low.
Lemonade takes pride in being a unique type of insurance company. By replacing brokers with bots and paperwork with algorithms, the licensed carrier provides a simple quote and claims process using machine learning and AI. They also charge a flat fee and do not profit from denying claims, eliminating the conflict of interest that has contributed to consumer distrust.
This insuretech platform takes pride in its social initiatives, and as a Certified B-Corp, they give back to nonprofits. However, getting their message out in an industry dominated by several entrenched global corporations is difficult. Because this innovative company required innovative marketing methods, they turned to LinkedIn.
Lemonade’s team realized their product was having the desired effect when they noticed an increase in the number of customers writing about their experiences with it on social media. When they realized this, they made a commitment to interact with these people – as well as non-policyholders – and foster genuine online conversations.
“We were surprised by the good karma that we were getting from people who didn’t think insurance would be such a social media worthy subject,” says Yael Wissner-Levy, Head of Communications and Content. This strategy extends beyond the Lemonade brand; the company’s CEO and cofounder Daniel Schreiber, and co-founder and COO Shai Wininger engage with members regularly.
Lemonade’s Successful Steps
“The Transparency Chronicles” is one of Lemonade’s most successful campaigns. They share candid, behind-the-scenes stories about their business, reflecting on mistakes rather than running away from them. This type of content, as Lemonade has discovered, can really stand out and gain traction in feeds full of corporate messaging, especially when compared to many competitors in the insurance industry. Interactions with their customers on their platform generate a wealth of data, which improves future interactions.
Interactions with their chatbots AI Maya, a playful onboarding and customer experience bot, and AI Jim, their claims bot that handles “first notice of loss,” are examples of this (and many times can manage a claim start to finish). Internally, AI has a significant impact on their approach to their book of business through advanced machine learning models, such as their recently released LTV6 model, and Lemonade’s forensic graph, which combines AI with the power of behavioral economics and big data to predict, deter, detect, and block fraud throughout the customer engagement.
Conclusion
According to a recent Prosper Insights & Analytics Survey, more than 30% of this general age range (Gen Z and Millennials) are looking to move in the next six months. Whether it’s renting their first apartment or purchasing a home, Lemonade now has two distinct opportunities with both Renter’s and Homeowner’s insurance, and their use of AI allows either audience to get a quote and obtain a policy in a matter of minutes.
