The insurance industry is facing a crucial moment as it increasingly turns to artificial intelligence (AI) tools. Dan Schreiber, the CEO of Lemonade, spoke about this shift during his keynote address at Insurtech Insights Europe in London on March 24, 2025. He emphasized that insurance companies need to embrace AI fully or risk falling behind.
Schreiber referenced a 2018 advertisement by State Farm that poked fun at AI-powered insurance bots. He argued that the ad misjudged the direction technology was heading in the insurance sector. The ad featured two NBA players and suggested that AI bots lacked the compassion of human agents. In contrast, Schreiber pointed out that Lemonade’s AI chatbots were already outperforming human agents in customer satisfaction at the time.
Lemonade took advantage of the situation by promoting the State Farm ad on Google, which Schreiber stated made State Farm look "ridiculous." He believes this incident highlights the reluctance of traditional insurers to adapt to technological advancements. "It’s not good enough to look at what is available today," Schreiber said, stressing the importance of anticipating future trends.
Despite the bold move, Lemonade’s promotion was short-lived, as Google quickly removed the ad. However, it succeeded in attracting media attention. Schreiber noted, "Don’t mess with a company 1,000th your size," suggesting that traditional insurers should be cautious in their approach to smaller, tech-savvy competitors.
Traditional insurance companies face significant challenges in adopting AI. Many still rely on outdated systems that hinder progress. Schreiber described these legacy systems as "black holes devouring time and cash." He pointed out that many companies have numerous disconnected systems that do not communicate effectively. Furthermore, existing management teams are often focused on maintaining the status quo rather than embracing change.
Schreiber believes that the potential of AI cannot be ignored. He stated that AI could replicate any commercially valuable task currently performed by humans, and this is not a distant future but a reality that is already emerging. He envisions a time when AI will play a central role in the insurance industry, including in functions like actuarial work and engineering.
Lemonade has seen success by integrating AI into its products for homeowners and renters. The company raised nearly $500 million in venture capital and had a successful IPO in 2020, bringing in $308 million. For the fourth quarter and full year of 2024, Lemonade reported significant growth, improved loss ratios, and positive adjusted free cash flow for the first time. In-force premiums grew by 26% year-on-year, reaching $944 million.
As the industry evolves, Schreiber’s insights highlight the pressing need for traditional insurers to adapt or risk becoming obsolete in a rapidly changing landscape.