Traditionally known for its slow and cautious approach to innovation, the insurance industry is undergoing a significant shift, thanks to artificial intelligence. As insurers seek to improve efficiencies and enhance customer experiences, they are embracing AI and generative AI as transformative tools.
At the Insurtech Insights Europe conference in London this week, organizations trumpeted gains in AI innovation and integration. But for Lemonade CEO Daniel Schreiber (pictured), only a few firms will thrive in the longer term.
“I think that many companies will absolutely fail at the AI test,” Schreiber said during a keynote speech on Wednesday. “They'll fail at it for the same reason that most acquisitions fail. On paper, it all makes sense, but there isn't a DNA match and there's organ rejection.”
AI adoption requires cultural transformation, not just technological integration, according to Schreiber. Companies that fail to align their culture with AI advancements will struggle with implementation, leading to rejection, he said.
“The only way for AI to be successful in the organization, beyond being a tool that people use to write things and query, is if you prepare for it,” Schreiber said. “AI, like people, needs to be trained. It needs feedback. It needs to be managed. It needs people looking over its shoulder and saying ‘yes’ and ‘no.’ If you build that platform, AI adoption will come.”
Organizations must also be able to “fire” AI, Schreiber said, and just as companies have HR departments, feedback cycles, and performance reviews for employees, they need a similar framework for AI.
However, many insurance leaders assume AI management is solely the IT department’s responsibility, overlooking the broader organizational infrastructure required for success.
Schreiber co-founded Lemonade in 2015. The insurtech offers renters, homeowners, car, pet, and life insurance across the US and parts of Europe, including Germany, the Netherlands, and France.
Its platform replaces traditional brokers with AI-driven solutions but has faced backlash for its AI use, including claiming its AI system was boosting profits by denying claims. In 2021, it faced a class action lawsuit in the US over alleged mishandling of biometric data.
Despite controversies around the US insurtech’s use of AI, the Lemonade CEO is adamant that AI-native firms are better positioned for growth due to their ability to scale and innovate faster than incumbents.
“Many of today's major brands have survived and thrived for hundreds of years,” Schreiber said. “But longevity should not be confused with immortality, because a new revolution is afoot. It's gathering steam, and it's rendering incumbents structurally disadvantaged.”
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