Setting insurance industry records with artificial intelligence

Since Lemonade first made a splash, its founders have been vocal about their mission to transform the insurance business model. Three rounds of funding (including a recent investment from Google Ventures) later and Lemonade hasn’t lost any momentum.  After a fall launch, and two weeks into the New Year, Lemonade has already released a series of announcements which could significantly increase awareness among consumers, expand Lemonade’s market share, and grow overall attention from an industry ready for change.

At the beginning of January, Lemonade shared a customer experience that quickly made the rounds and set a new precedent for claims filing. According to the company’s blog, Lemonade was able to review and pay a claim in less than three seconds with the help of its artificial intelligence chatbot, Jim.  While the speed and automation with which the claim was handled is significant, Lemonade itself notes that most claims will still require some human interaction and not offer such instantaneous payment. Still, the implications that a company is able to complete claims assessment, including running the claim against 18 anti-fraud algorithms in a matter of seconds, are substantial.

83% of consumers say the quality of claims handling is important when choosing to work with an insurance company

First, the story suggests that the speed with which claims can be paid, and how fast they actually are paid, is drastically different. Brands hoping to compete in the new world of AI and automation must be able to minimize this gap and pay claims in an efficient amount of time. Mintel research reveals that 83% of consumers emphasized that quality of claims handling is important when choosing to work with an insurance company.

Furthermore, the user experience, the ease of filing the claim and handling the process through an app, is significant on its own. Too often innovations focus on the user experience, up to purchase, with little emphasis on the back-end systems that trip up so many customers. Claims improvements like video claims processing may speed up the process but mostly focus on the ease of filing the claim and less on the payment portion of the claims process. Lemonade has made the entire claims process part of the discussion, demonstrating that it can be as easy as sending a text.

Finally, the story that Lemonade used to showcase AI claims capabilities cleverly addresses that renters and homeowners insurance can cover more than just property while it is at the insured address. Lemonade tells the story of an individual who lost their Canadian Goose coat on a Saturday night, clearly showing just how expansive coverage can actually be.

As discussed in Mintel’s 2017 Insurance Marketing Trend “In Layman’s Terms,” simplification for consumers will go beyond the acquisition to help people understand their policies and how they work in much more powerful ways in 2017. This demonstration of what property insurance can cover is just one example of brands explaining coverage and gaps in coverage in a more palatable way.

Chatbots are only one aspect of a multi-pronged approach Lemonade is taking to transform an industry and the perceptions that have long haunted many brands. As Lemonade scales quickly to offer insurance in a majority of states and plans to publish details such as conversion rates and growth dynamics, the company seems committed to not just maintaining the momentum, but building on it as quickly as they can.

Stephanie Roy is the Director of Insights, Insurance at Mintel. She is responsible for providing internal and external stakeholders with insights and analysis on trends in the Life, Health and P&C insurance industries across North America.