Lemonade: This $5 billion insurance company likes to talk up its AI. Now it’s in a mess over it
Yet less than a year after its public market debut, the company, now valued at $5 billion, finds itself in the middle of a PR controversy related to the technology that underpins its services.
Confusion about how the company processes insurance claims, caused by its choice of words, “led to a spread of falsehoods and incorrect assumptions, so we’re writing this to clarify and unequivocally confirm that our users aren’t treated differently based on their appearance, behavior, or any personal/physical characteristic,” Lemonade wrote in its blog post Wednesday.
Lemonade’s initially muddled messaging, and the public reaction to it, serves as a cautionary tale for the growing number of companies marketing themselves with AI buzzwords. It also highlights the challenges presented by the technology: While AI can act as a selling point, such as by speeding up a typically fusty process like the act of getting insurance or filing a claim, it is also a black box. It’s not always clear why or how it does what it does, or even when it’s being employed to make a decision.
In its blog post, Lemonade wrote that the phrase “non-verbal cues” in its now-deleted tweets was a “bad choice of words.” Rather, it said it meant to refer to its use of facial-recognition technology, which it relies on to flag insurance claims that one person submits under more than one identity — claims that are flagged go on to human reviewers, the company noted.
Wissner-Levy told CNN Business that AI Jim is a “branded term” the company uses to talk about its claims automation, and that not everything AI Jim does uses AI. While AI Jim uses the technology for some actions, such as detecting fraud with facial recognition software, it uses “simple automation” — essentially, preset rules — for other tasks, such as determining if a customer has an active insurance policy or if the amount of their claim is less than their insurance deductible.
“It’s no secret that we automate claim handling. But the decline and approve actions are not done by AI, as stated in the blog post,” she said.
When asked how customers are supposed to understand the difference between AI and simple automation if both are done under a product that has AI in its name, Wissner-Levy said that while AI Jim is the chatbot’s name, the company will “never let AI, in terms of our artificial intelligence, determine whether to auto reject a claim.”
“We will let AI Jim, the chatbot you’re speaking with, reject that based on rules,” she added.
Asked if the branding of AI Jim is confusing, Wissner-Levy said, “In this context I guess it was.” She said this week is the first time the company has heard of the name confusing or bothering customers.