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Lemonade, the fast-growing, machine learning-powered insurance app, put out a real lemon of a Twitter thread on Monday with a proud declaration that its AI analyzes videos of customers when determining if their claims are fraudulent. The company has been trying to explain itself and its business model — and fend off serious accusations of bias, discrimination, and general creepiness — ever since.
The prospect of being judged by AI for something as important as an insurance claim was alarming to many who saw the thread, and it should be. We’ve seen how AI can discriminate against certain races, genders, economic classes, and disabilities, among other categories, leading to those people being denied housing, jobs, education, or justice. Now we have an insurance company that prides itself on largely replacing human brokers and actuaries with bots and AI, collecting data about customers without them realizing they were giving it away, and using those data points to assess their risk.
Over a series of seven tweets, Lemonade claimed that it gathers more than 1,600 “data points” about its users — “100X more data than traditional insurance carriers,” the company claimed. The thread didn’t say what those data points are or how and when they’re collected, simply that they produce “nuanced profiles” and “remarkably predictive insights” which help Lemonade determine, in apparently granular detail, its customers’ “level of risk.”
Lemonade then provided an example of how its AI “carefully analyzes” videos that it asks customers making claims to send in “for signs of fraud,” including “non-verbal cues.” Traditional insurers are unable to use video this way, Lemonade said, crediting its AI for helping it improve its loss ratios: that is, taking in more in premiums than it had to pay out in claims. Lemonade used to pay out a lot more than it took in, which the company said was “frigging terrible.” Now, the thread said, it takes in more than it pays out.
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