NakedA South African insurtech company that helps consumers secure their cars, homes and valuables, has raised $17 million in Series B funding led by the International Finance Corporation (IFC).
The round welcomed the participation of the German Development Finance Institution (DEG) and previous investors, Yellowwoods and Hollard. The news follows the $11 million Series A round led by Naspers that the South African insurtech announced in August 2021.
According to a statement, the funding presents Naked with the opportunity to enhance its AI and use it to grow Africa’s insurance market, which is worth more than $68 billion in annual gross written premiums. South Africa accounts for 70% of this market, with an annual gross written premium market of over $47 billion. However, only a fraction of personal insurance is sold without human intervention.
But the pandemic changed the way South African millennials consume insurance products these days. While 28% of South African millennials are looking for insurance, 60% of them would prefer to communicate with their insurer online. For insurers, this online automation can reduce the cost of a claims process by 30%.
Founded in 2018 by Alex Thomson, Sumarie Greybe and Ernest North, Naked is a digital insurance platform that covers auto, content, home and freelance items. The company says it uses artificial intelligence to create new processes and experiences for its customers without speaking to a contact center agent, he said in a statement. For businesses, it allows them to realize significant cost savings from automation and pass them on to customers in the form of lower premiums.
Naked says its technology and business model sets it apart from other African insurtechs like Kenya-based Turaco, which raised $10 million last September.
“In contrast to the traditional model where insurers’ profits depend on how much they pay out in claims, Naked charges a fixed percentage of clients’ premiums. In years when claims are lower than expected, the surplus goes to communities and good causes chosen by customers,” he said in a statement.
Adamou Labara, IFC Country Manager for South Africa, said of the investment: “Improving access to insurance products is a key driver of financial inclusion in South Africa, as it has the potential to preserve assets, increase income and reduce uncertainty. 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.”
