Lemonade: Artificial Intelligence-Based Value Innovation in Home and Renters Insurance Industry


The case discusses how Lemonade Inc., an insurtech startup, captured value for Millennials by lowering insurance premium requirements by almost 50% compared with that charged by large insurance companies, also processing claims within a few minutes. Lemonade especially utilized artificial intelligence and behavioral economics such that their business practice has zero paperwork and instantly approves insurance policies and claim reimbursements. However, by 2020 Lemonade had less than 0.1% of the home and renters insurance market in the United States, which was led by large insurance companies such as State Farm and Allstate. Lemonade’s database also had a relatively small number of customers, which adversely influenced the preciseness of data required for behavioral analytics. If companies such as State Farm, with much larger databases, digitize their insurance products, Lemonade’s challenges will become further aggravated. What can Lemonade CEO Daniel Schreiber use as competitive advantage against large traditional insurance companies? What should he do to improve the working of Lemonade’s data analytics?

This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2023 Sage Publications, Inc. All Rights Reserved

You are not authorized to view Teaching Notes. Please contact your librarian for access or sign in to your existing instructor profile.
locked icon

Sign in to access this content

Get a 30 day FREE TRIAL

  • Watch videos from a variety of sources bringing classroom topics to life
  • Read modern, diverse business cases
  • Explore hundreds of books and reference titles