ITM. Practice 2: Lemonade

Lemonade is an American insurance company that has primarily introduced innovation in the following dimension:

• Product innovation

• Breakthrough Innovation

• Commercial Innovation

• Business Model Innovation

Lemonade is entering an existing market with a new business model driven by advanced technologies. As such, the degree of innovation applied by Lemonade can be categorized as follows:

• Incremental innovation

• Breakthrough Innovation

• Radical Innovation

• Disruptive Innovation

Lemonade generates its revenue primarily through annual insurance premiums paid by its customers.

• False

• True

Given that the insurance industry offers numerous opportunities for technological advancement—and considering Lemonade’s strong technological capabilities to compete with more traditional insurers—we can say that Lemonade is currently pursuing a:

• Offensive strategy

• Defensive strategy

• Oppotunistic strategy

• Traditional strategy

Which of the following technologies is not currently central to Lemonade’s operations?

• Blockchain

• Artificial Intelligence

• Chatbots

• Humanoid Working Robots

Lemonade differentiates itself from traditional insurers by:

• Offering lower deductibles for high-risk customers

• Employing a broker-heavy distribution model through AI

• Charging a flat fee and donating unclaimed premiums to charity

• Providing tailored offerings exclusively in pet insurance products.

Traditional insurance companies such as Allstate and State Farm took less than 5 years years to reach $1 billion in premiums, while Lemonade did it in more than 10 years.

• False

• True

Due to the implementation of AI technologies and its innovative business model, Lemonade is considered a fully disruptive innovation, causing a clear substitution effect in the insurance industry, with incumbents disappearing or losing relevance.

• False

• True

What aspect of Lemonade’s customer relations gives it a competitive advantage?

• 24/7 broker-based support

• A fully digital, app-based customer experience

• Multilingual call center access

• Presence around the globe

Compared to traditional insurers, Lemonade’s business model seeks to build long-term customer loyalty primarily by:

• Reducing switching costs through annual policy bundling and automated renewals.

• Using unclaimed premiums to fund loyalty rewards and discounts for frequent users.

• Offering low-cost options and competing primarily on price against traditional insurers.

• Redirecting unused premiums to nonprofits chosen by customers, aligning business incentives with prosocial behaviour.