US insurance company Lemonade uses AI at every stage of its operations, from selling policies to handling claims, and says it spends approximately 5% of premium income on handling claims compared with a typical 9% for the wider US industry.
The company is growing rapidly, with sales rising from $94 million in 2020 to $738 million in 2025, and revenue is expected to keep expanding at around 30% a year. But Lemonade continues to lose money, with estimates suggesting it will be in the red both this year and in 2027, though management believes the firm may start to achieve positive Ebitda in 2027.
Competition is also intensifying. Rival Allstate announced this summer that it is launching ALLIE, its large language intelligent ecosystem, while other major competitors such as State Farm plan to use AI too. Lemonade also faces competition from other AI-driven companies, notably Root.
Investors appear to be souring on the stock. Lemonade trades at 3.7 times sales, more than four times the 0.83 times sales that Allstate, a profitable and fast-growing company, sells for, while Root, which operates a similar tech-driven model but turns a profit, trades at 0.48 times sales. Lemonade's shares have fallen by more than 50% from their 52-week high and have lagged the wider market over one, three, six and 12 months, and the stock is below both its 50- and 200-day moving averages.