IN THE HARTFORD CONNECTICUT SUPERIOR COURT
`
`Plaintiff
`(1) ADRIAN JOHNSON
`v
`
`1) LEMONADE INSURANCE COMPANY,
`Defandant
`
`Case No.
`
`COMPLAINT
`
`PETITION
`COMES NOW Plaintiff Adrian Johnson and for her causes of action against Defendant,
`Lemonade Insurance Company, states:
`JURISDICTION AND VENUE
`1. Plaintiff is a citizen of the State of Connecticut and a resident of HARTFORD COUNTY
`2. Defendant, Lemonade Insurance Company (hereafter, “Lemonade”), is a New York insurance
`company conducting business in the State of Connecticut.
`4.Jurisdiction and Venue in this action are properly before this Court.
`INSURANCE INDUSTRY OBLIGATIONS
`4. An insurance company conducting business in the State of Connecticut is obligated to abide
`by the terms of the insurance policies issued to its Connecticut insureds and comply with all
`Connecticut law applicable to those policies and claims made on the same.
`5. The CUIPIA Code and CUPTA informs all property and casualty insurers conducting business
`in the State of Connecticut that “[t]he minimum standard of performance for all insurers is to
`comply with These provisions require, at a minimum, that:
`6. An insurance company must retain sufficient notes and work papers such that the pertinent
`events of a given claim may be recreated at a later date;
`7. An insurance company must meaningfully respond to communications from its in- sured
`within a reasonable period of time
`8. An insurance company must not knowingly misrepresent facts related to a loss;
`9. An insurance company must adopt and implement reasonable claims handling
`standards that ensure the prompt resolution of claims;
`10. An insurance company must not require an insured to file a lawsuit to recover ben- efits due
`under an insurance policy;
`11. An insurance company must accept or deny a claim within reasonable time, after receipt of
`proof of loss; and
`12. An insurance company must keep an insured fully apprised of the status of its in- vestigation
`and provide written notification in the event it cannot timely complete its claims inves- tigation
`and evaluation.
`13. An insurance company conducting business in the State of Connecticut is also obli- gated to
`act in compliance with the duty of good faith and fair dealing owed to all first party insureds
`when handling claims submitted by its policyholders.
`14. Although the duty of good faith and fair dealing is multi-faceted, at its core, it re- quires an
`insurance company to:
`A. Conduct a reasonably thorough factual investigation of claims;
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`

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`B. Evaluate the facts gathered during its investigation in a fair, even-handed,
`and non-adversarial manner; and
`C. Promptly pay all benefits owed.
`15. To insureds timely receive all benefits available under the terms of their insurance contracts
`in good faith, reputable insurance companies strive to adhere to time-honored insurance
`industry claims-handling standards.
`LEMONADE INSURANCE COMPANY
`16. Defendant Lemonade Insurance Company (“Lemonade”) is a new insurance com- pany with
`a different approach to insurance claims handling driven by a focus on technology, artificial
`intelligence (“AI”), and behavioral economics1.
`17. Lemonade was co-founded by Daniel Schreiber (“Schreiber”) and Shai Wininger
`(“Wininger”), both of whom are “veterans of the tech ecosystem and knew nothing about
`insurance when [they] first started [Lemonade].”2
`18. Lemonade’s goal is to disrupt the existing insurance marketplace and supplant ex- isting
`insurance industry standards with its new approach. Schreiber has described prevailing in-
`surance industry standard practices as a “black hole” and is positioning Lemonade to “a velocity
`where we can ignore the black hole.”3
`19. Lemonade employs its tech forward approach to insurance from the beginning of every
`relationship with a prospective insured. For example, applications for insurance are taken by an
`AI chatbot named Maya. During the digital application process, Lemonade gathers upwards of
`1,700 data points used by its AI algorithms to quantify the risk associated with a prospective
`insured.4
`
`1 “Behavioral economics provides a framework to understand when and how people make
`errors.” https://www.psychologytoday.com/us/blog/science-choice/201705/what-is-behavioral-economics
`2 https://www.forbes.com/sites/afdhelaziz/2020/03/09/the-power-of-purpose-how-lemonade-is-disrupting-
`insurance-with-goodness-and-a-new-foundation/?sh=206c61837288
`3 https://www.fastcompany.com/3068506/lemonade-is-using-behavioral-science-to-onboard-customers-
`and-keep-them-honest
`4 https://www.nasdaq.com/articles/how-lemonade-could-change-insurance-2020-12-10
`
`

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`20.. Lemonade’s reliance on technology extends to the claims
`handling process, too. Claims made by Lemonade insureds are
`initially handled by an AI chatbot named Jim. Using information
`provided by its insured, Lemonade’s AI driven claims handling system
`subjects the claim to “dozens of anti-fraud algorithms” after which a
`claim is either paid or assigned to “a devoted team of humans to
`handle ASAP.”5
`21. Lemonade’s claims handling system creates the impression within
`its human claims handling employees that claims not immediately paid
`by its AI algorithms are fraudulent and that insureds whose claims are
`not paid by the AI algorithm are themselves frauds.
`22. Lemonade’s claims handling system incorporates techniques from
`behavioral eco- nomics as well. Lemonade has employed Dan Ariely,
`James B. Duke Professor of Psychology and Behavioral Economics at
`Duke University, to assist it in incorporating principles and lessons
`drawn from behavioral economics into its claims handling
`environment. Mr. Ariely is the author of a number of popular books
`focusing on the topics irrational human behavior, the predictability of
`such behavior, its impact in the world of personal finance, and human
`(dis)honesty.
`23. Lemonade co-founder, Wininger, has noted that Ariely’s research
`helps one under- stand what “brings out the best and worst in people”
`and that “together with [Lemonade’s] unique technology, [behavioral
`economics] will help us decrease fraud, get rid of bureaucracy and
`lower costs for customers.”6
`24. Lemonade co-founder Schreiber has noted that Lemonade’s
`“whole product flow is informed by behavioral economics.”7
`
`5 https://www.lemonade.com/claims
`6 https://www.insurancejournal.com/news/national/2016/02/24/399698.htm
`7 https://www.insurancethoughtleadership.com/lemonade-anniversary-interview-with-ceo/
`
`

`

`25. Lemonade claims its use of AI and behavioral economics in its
`claims handling process is designed to increase trust between insured
`and insurer.
`26. In reality, Lemonade’s business processes are based on a
`fundamental belief that all insureds will cheat, even if just a little.
`27. Lemonade’s corporate culture creates and perpetuates the belief
`in its claims han- dling employees that claims not automatically paid
`by its AI claims-handling algorithms are fraud- ulent and this bias is
`ingrained in the humans responsible for handling such claims by way
`of Lemonade’s corporate culture as well as the training and
`supervision of its employees.
`28. The training and supervision of Lemonade’s human
`claims-handling employees is unreasonably focused on confirming an
`insured whose claim is not paid by its fraud detecting AI
`claims-handling algorithm has committed fraud or otherwise acted
`dishonestly.
`29. Lemonade’s business practices have created significant turnover
`of human claims- handling employees.
`30. Former Lemonade claims-handling employees have explained to
`Lemonade that its claims-handling practices and / or claims-handling
`system violate insurance industry claims-han- dling standards and
`regulations promulgated by various state insurance departments.
`31. Former Lemonade claims-handling employees have explained to
`Lemonade that its claims-handling practices and / or claims-handling
`system violate the ethics underlying prevailing insurance claims
`handling standards.
`32. Lemonade has sought to silence these former claims-handling
`employees by lever- aging them into signing non-disclosure
`agreements.
`33. For claims not paid by its fraud detecting AI claims-handling
`algorithm, Lemonade has created a system that brings out the worst in
`people, one in which paying customers are prom- ised they will
`
`

`

`receive assistance when bad things happen, but are instead met with
`adversarial treatment and mistrust.
`
`FACTUAL BACOGROUND
`
`In November 2029 lemonade insurance issued an insurance policy to
`the plaintiff. For a home located at 1247 Julian ave Waterloo Iowa
`50701.
`
`On May 3, 2021, a major test at the residence, cause all the plaintiffs
`items in the home to be stolen.
`
`In July 2021, a plaintive first reported the tattoo, lemonade insurance
`company, and did not receive a response from them
`
`Plantiff was later incarcerated and cannot fully complete the claim until
`she gets released from prison in December 2022
`
`Plaintiff filed a claim on or around March 2022 for the theft
`
`Originally the plaintiff filed an affidavit of theft, along with a inventory of
`all the property that was stolen and attached receipts and other
`documents, proving that she had bought the items as well as the
`police report that she filed
`Several days later the plaintive was contacting Buy and adjuster from
`the insurance company and was asked to do a recorded statement
`which she did.
`
`About two weeks after the original claim was filed, the plaintive
`received a letter from the insurance company, informing her of their
`reservation of rights and asking her to submit more documentation
`
`

`

`proving the theft including a lease to the residence utility bills and
`several other items which the plaintive did send.
`Other playing today send most of
`these items the company later
`inform Miss Johnson that she would have to participate in an
`examination under oath in order for claim to be submitted and
`approved Miss Johnson believes that the insurance company is
`asking her to participate in the examination, in order to find a reason in
`which to denied the claim, and to procrastinate and delay approval of
`the claim because they know that she only has a limited amount of
`time to file a lawsuit, and if they could deny the claim for several days
`that she would have no recourse and wish to recover her losses
`Miss Johnson was also contacted by an SRU investigator, who has
`has not found a reason to approve the claim
`Misaskim believes that the insurance company is denying her claim
`and delaying payment of the claim in order to not have to face legal
`responsibility from the court. they are fully aware that Miss Johnson
`didn’t have a lot of time in order to file a lawsuit in order to recover her
`losses if she didn’t get the claim approved. There is no reason at this
`point for the insurance company tonight for her claim because she has
`proving it beyond a reasonable doubt that the theft occurred and she
`has substantially complied with everything. The insurance company
`has asked of her
`Miss Johnson believes that the insurance company is only conducting
`the examination under oath in order to have more time to delay her
`claim pass the date of the lawsui that according to the contract can
`only be file two years after the date with that occurred, which is the
`main reason why this lawsuit is being filed.
`The parties at Lemonade have participated in discrimination, and Ms.
`Johnson also believes that she is being discriminated against because
`she is transgender and African-American. .
`
`

`

`As of the date miss Johnson has received no settlement from the
`insurance company and is currently scheduled to participate in the
`EUA on May 10, 2023.
`
`Why did this happen?
`66. Lemonade, Inc., Lemonade’s parent company, became a publicly
`traded company in the summer of 2020. Its initial public offering
`(“IPO”) was one of the most successful of the year, netting the
`company approximately $333.6 million.
`67. Leading up to the IPO, Lemonade was on shaky financial ground.
`From its creation in 2015, Lemonade had never been profitable and
`possessed an accumulated deficit of nearly a quarter of a billion
`dollars.8
`68. Lemonade is required to pay its parent company a fixed fee equal
`to 25% of all premiums. This is tantamount to a built-in profit margin of
`25% - far more than the profit margins of well-established insurers
`who employ prevailing insurance industry standards in the underwrit-
`ing of policies and handling of claims made on those policies.
`69. Lemonade makes extensive use of Proportional Reinsurance
`Contracts in which Lemonade cedes the remaining 75% of its
`premiums to reinsurers in exchange for the reinsurers funding all
`corresponding claims. Lemonade’s reinsurers pay Lemonade back a
`25% ceding Com- mission.
`
`8 https://content.edgar-online.com/ExternalLink/EDGAR/0001047469-20-
`003912.html?hash=bc17354398d8dc22e6dd6146a809ff1dd1cdf5fe5ae602ff8e41fc851f
`b84d40&dest=A2
`241997ZEX-10_15_HTM#A2241997ZS-1A_HTM_CG40510_RISK_FACTORS
`
`

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`. After Lemonade pays its parent company and offsets premiums
`ceded to reinsurers, it retains less than 19% of the premiums paid by
`its insureds and must utilize those funds to manage 25% of the
`remaining insured risk.
`71. Lemonade manages the remaining 25% of its risk via
`Non-Proportional Reinsur- ance Agreements “with a view to
`maximizing profitability.”9
`72. Lemonade’s reinsurance agreements prohibit it from paying any
`loss exceeding $125,000.00.10
`73. In the years leading up to the IPO Lemonade’s business was hit
`particularly hard due to an unprecedented series of natural disasters
`including wildfires in California and multiple hurricanes on the east
`coast of the United States.
`74. As a result, Lemonade had extraordinarily high loss ratios of 161%
`in 2017, 113% in 2018, and 79% in 2019.11
`75. Lemonade’s viability is dependent upon retaining favorable terms
`with its reinsur- ers by way of consistently decreasing its historically
`high loss ratios.
`76. As with many technology focused business start-ups, early-stage
`employees and executives are compensated, in part, with stock and
`stock options.
`77. Lemonade is transparent with the public and its own employees
`about the need to decrease loss ratios as a necessary part of its
`mission to disrupt the insurance industry.
`78. The human claims-handling employees are aware that the
`payment of large losses like Plaintiff’s drive up Lemonade’s loss ratio
`and endanger the financial survival of Lemonade and thus
`themselves.
`
`9 https://www.sec.gov/Archives/edgar/data/1691421/000104746920003416/a2241721zs-1.htm10 Id.11
`https://www.sec.gov/Archives/edgar/data/1691421/000104746920003943/a2242013z424b4.htm
`
`

`

`79. Lemonade has acknowledged in publicly available Securities and
`Exchange Com- mission filings that its intentional deviation from
`prevailing insurance industry claims handling standards make “its
`efficacy unpredictable and susceptible to unintended consequences”
`as well as “unintentional bias and discrimination.”
`80. Plaintiff’s loss was valued at more than $25.000.00
`81. Plaintiff’s loss was not immediately paid after being subjected to
`Lemonade’s fraud
`detecting AI claims-handling algorithm.
`82. Plaintiff’s claim was assigned to Lemonade’s human
`claims-handling employees, who are trained to confirm instances of
`fraud, who are trained to minimize the payment of claims, and who are
`incentivized to drive Lemonade’s business toward profitability.
`83. Plaintiff’s claim was underpaid in an effort to maintain favorable
`loss ratios.
`84. Payment of Plaintiff’s claim was delayed with the intention of
`leveraging Plaintiff
`to settle her claim for less than its full value.
`85. As a result, Plaintiff and her claim were handled unreasonably.
`Plaintiff was la- beled as fraud and subjected to unreasonably
`burdensome documentation requests, did not receive appropriate and
`timely guidance from Lemonade, received unreasonably delayed
`payment of ben- efits due to her, and has not received all policy
`benefits to which she is entitled.
`86. In handling Plaintiff’s claim, Lemonade unreasonably prioritized its
`own financial well-being over that of Plaintiff, her husband, and her
`children.
`FIRST THEORY OF RECOVERY BREACH OF INSURANCE
`CONTRACT
`loss, the Plaintiff was an
`87. At the time of the above-referenced theft
`insured under a Policy of insurance issued to her by Lemonade, which
`provides benefits in the event of a theft loss.
`
`

`

`88. Plaintiff made a claim to Lemonade for benefits under the terms of
`the Policy.
`. Lemonade never paid any portion of the claim benefits, which were
`due to the plaintiff
`90. Lemonade’s denial of Plaintiff’s claim is a breach of the insurance
`contract.
`91. Plaintiff has suffered significant financial loss, by way of unpaid
`insurance policy benefits, as a direct and proximate result of
`Lemonade’s breach of insurance contract.
`SECOND THEORY OF RECOVERY:
`BREACH OF THE DUTY OF GOOD FAITH AND FAIR DEALING
`92. Lemonade is bound by Connecticut statutory, common, and
`regulatory law, to honor its contractual obligations to its insureds fairly
`and in good faith.
`93. Lemonade breached its duty of good faith and fair dealing to the
`Plaintiff by:
`A. Failing to conduct a full and fair investigation of her claim;
`B. Failing to fully and fairly evaluate facts it knew or should’ve known
`in re-
`gard to her claim;
`C. Unreasonably denying payment of benefits due to Plaintiff;
`D Treating Plaintiff in an impermissibly adversarial manner;
`E. Subjecting Plaintiff’s claim to unnecessary and unreasonably
`documentation requests;
`F. Unreasonably delaying payment of benefits;
`G. Creating and maintaining an underwriting system that significantly
`deviates
`from prevailing insurance industry standards and which is designed to
`delay, deny, and de-value claims made by its insureds;
`H. Creating and maintaining a claims-handling system that
`significantly devi- ates from prevailing insurance industry standards
`
`

`

`and which is designed to delay, deny, and de- value claims made by
`its insureds;
`I. Creating and maintaining a claims-handling system that significantly
`devi- ates from prevailing insurance industry standards and which is
`designed to transfer the primary responsibility for handling an
`insurance claim from licensed human beings to a self-learning AI
`algorithm;
`J. Creating and maintaining a claims-handling system that significantly
`devi- ates from prevailing insurance industry standards in that its
`claims-handling employees are trained to view all claims not approved
`by Lemonade’s self-learning AI algorithm as fraudulent;
`rithm; and
`K. Refusing to properly train, educate, and supervise its self-learning
`AI algo-
`L. Refusing to properly train, educate, and supervise its
`claims-handling em-
`ployees.
`94. As a result of Lemonade’s breach of the duty to deal fairly and in
`good faith with
`the Plaintiff, she has suffered damages in excess of $75,000.00.
`95. Lemonade’s breach of the duty of good faith and fair dealing
`warrants an award of
`punitive damages sufficient to punish and deter others from similar
`conduct.
`96. Plaintiff has suffered significant financial loss, by way of unpaid
`insurance policy
`benefits, as a direct and proximate result of Lemonade’s breach of
`insurance contract.
`The defendants have caused Miss Johnson, mental anguish and
`unreasonable pain and suffering due to their conduct during this
`investigation, and the stress caused by them
`
`

`

`Relief
`
`Wherefore, plaintive has no other recourse in order to recover
`damages, resulting from the loss: Plaintiff requests that this
`honorable court award her $150,000 in damages, a jury trial,
`punitive damages, actual damages, and compensatory damages.
`A Declaration judgement statement that lemonade insurance
`company has breached the terms of the contract and has
`engaged in unreasonable denial of her claim, as well as any other
`relief this court deems appropriate
`
`RESPECTFULLY SUBMITTED
`ADRIAN JOHNSON
`May 3rd, 2023
`Pro Se
`1085 Albany Ave
`Hartford, CT 06112
`JURY TRIAL DEMANDED
`
`