10 Worst AI Stocks to Buy According to Reddit

5. Lemonade Inc. (NYSE:LMND)

Short % of Shares Outstanding As of August 30: 23.83%

Number of Hedge Fund Holders: 17

Lemonade Inc. (NYSE:LMND) is an AI-powered insurance company that offers renters’ insurance, homeowners’ insurance, car insurance, pet insurance, and term life insurance in the US, together with some contents and liability policies in Germany and the Netherlands and renters’ insurance in France.

AI algorithms help streamline the company’s claims process, automate underwriting, and provide personalized pricing. It is integrating GenAI to optimize operations and improve financial performance. Through significant investments in AI-powered automation, it plans to simplify over 100 business processes. Initial cost-saving prototypes are expected to be developed within the next year and a half. Its GenAI can handle 30% of customer interactions independently.

The company has found a new focus on lower-risk products like pet and renters insurance, expanding into Europe, and introducing homeowners insurance in the UK, France, and select US regions. AI-driven underwriting allows it to identify profitable home insurance opportunities. Additionally, it partnered with third-party insurers in certain areas for home insurance.

Lemonade Inc. (NYSE:LMND) saw a 16.63% year-over-year increase in Q2 2o24 revenue, fueled by increased earned premiums, a slightly higher reinsurance commission rate, and a 45% increase in investment income. The gross loss ratio improved to 79% in Q2 from 94% in Q2 2023.

In-force premium grew 22% year-over-year, while customer count increased by 14%. Premium per customer was up 8%, driven by rate increases.

It is strategically employing AI across its operations, from customer service to internal processes, and seeks to capitalize on the growing trend of digital, personalized insurance products driven by AI.