Daniel Schreiber, CEO of Lemonade, joined CNBC’s “Fast Money” to discuss the insurer’s encouraging quarterly results and the significant role artificial intelligence (AI) is playing in shaping the company’s future. Despite the broader challenges in the insurance market, Lemonade reported a smaller-than-expected loss, boosting shareholder confidence and driving its stock up by 8.5%.

Schreiber opened the discussion by emphasizing the efficiency and necessity of their AI-driven business model. “Every policy that we sell by law has to be profitable, so the marginal profit is significant,” Schreiber explained. He detailed how Lemonade’s innovative use of technology is not just a part of the business strategy but is central to their operations: “AI sells 98% of our policies, and 50% of our claims are handled from start to finish without any human intervention.”

The impact of AI on Lemonade’s operations has been profound, with Schreiber noting dramatic improvements in cost efficiency and customer service. “Consumers are delighted—they get a claim paid in three seconds. They’re not missing the human, but the cost just absolutely collapses, and we’re seeing that in the numbers, doubling the business,” he said.

Reflecting on the quarterly results, Schreiber shared that Lemonade has doubled its gross profit year-over-year and reduced losses by a third. This progress is a direct result of their aggressive growth strategy fueled by AI advancements. “The more we sell, the more profitable we get, and we expect to break into cash flow positivity before the year is out,” he affirmed.

During the interview, Schreiber also addressed how Lemonade leverages AI to gain a competitive edge: “Where other insurers see crude groupings of policyholders and are unable to see the nuances between them, we have orders of magnitude more insight, almost x-ray vision, relative to incumbency, and therefore, the ability to price differentially and choose who we underwrite with far greater precision perhaps than the industry is used to.”

Schreiber was optimistic about the future trajectory of Lemonade’s AI technology. “Machine learning and the tools of modern technology are transformative to the foundations of insurance,” he remarked. The CEO outlined how continued investments in AI are integral to Lemonade’s strategy, primarily as they aim to scale and maintain profitability. “We need to grow into profitability; insurance is not a business that’s profitable at sub-scale levels, so growth is a key condition to that profitability,” he explained.

Looking ahead, Schreiber reaffirmed the company’s focus on expanding its AI capabilities to enhance operational efficiencies and customer experiences further. Lemonade has raised its guidance for the year, signaling confidence in its business model and growth trajectory. “During Q-2, we continue to invest in growth, perhaps more than the market expected. So, we’ve been not merely growing fast, but accelerating growth. We are going to continue that trend line all the way up into the higher 20s throughout the year, and hopefully higher than that beyond,” Schreiber concluded.

With AI at the core of its operations, Lemonade is not just navigating the current market complexities. Still, it is also setting the stage for a new era of tech-driven insurance services.