South African artificial intelligence (AI)-powered insurtech Naked has raised US$17 million (about R290 million) in investment funds.
The Series B funding round was led by International Finance Corporation (IFC), a member of the World Bank Group and the largest global development institution focused on the private sector in emerging markets. In addition to the German Development Financing Association (DEG), the original investors from Naked, Yellowwoods and Hollard are also participating in the financing round.
IFC and DEG both support Naked in line with their goals to invest in companies that can make a social contribution, increase competition in financial services in Africa and promote financial inclusion. The funding round signals strong investor confidence in Naked’s management, technology and positioning, and in the significant opportunity to leverage AI and digital experiences to grow the African insurance market in the years to come.
Naked was founded by actuaries Alex Thomson, Sumarie Greybe and Ernest North with a vision to create a more accessible, convenient and transparent insurance experience. They started developing the concept and systems in 2016, launched in 2018 and are now rapidly scaling the business. Naked has built an end-to-end digital platform that allows clients to manage their entire insurance experience online through one award-winning app.
Customers can get a quote, purchase insurance, manage their policy and file claims without having to speak to a contact center agent. Naked’s AI-based system provides customer convenience while also allowing the company to realize significant cost savings from automation and pass these on to customers in the form of lower premiums.
Unlike the traditional model, where insurers’ profits depend on how much they pay for claims, Naked charges a fixed percentage of customers’ premiums. In years when claims are lower than expected, the excess goes to customer-chosen communities and charities. This approach eliminates the conflict of interest at the heart of traditional insurance.
“More than five years ago we set out to create an insurance platform that people would love because it was fair, convenient and transparent, at groundbreaking prices,” syas co-founder Alex Thomson. “Since our launch in 2018, we have been overwhelmed by customer enthusiasm for our offering and have exceeded our growth targets every year.
“We are pleased to bring new investors on board in this funding round to accelerate our growth plans. This investment confirms our position as a pioneer of fully digital insurance in South Africa and will allow us to grow our team, continue to invest in technology that puts customers in control and expand into new markets.”
Adamou Labara, IFC Country Manager for South Africa says: “Increasing access to insurance products is an important driver for financial inclusion in South Africa as it has the potential to preserve assets, increase income and reduce insecurity. IFC’s investment in Naked will help increase the penetration of technology-driven insurance in the country and contribute to job creation and economic growth.”
