South African AI based insurance startup gets R30 million investment boost

Naked, an artificial intelligence-driven car insurance provider, says it plans to grow its team, ramp up customer acquisitions and expand into new short-term insurance product categories.

This, it said, follows a strong first six months of trading, due to customer acquisition and strong retention rates.

Naked said it has met key milestones, which has triggered an additional R30 million investment from founder investors, Yellowwoods and Hollard Insurance.

This will enable the company to accelerate its growth and expand into new product lines, it said.

“We are proud to receive this vote in confidence from our investors and look forward to rolling out new products in response to customer demand,” said Naked co-founder, Alex Thomson.

Co-founded by actuaries Thomson, Sumarie Greybe, and Ernest North, Naked uses AI and automation to lower costs, put customers in control of their insurance experience, reduce fraud and enhance insurance as a social good.

Customers can go online and get a final car insurance quote in less than 90 seconds without speaking to a contact centre agent.

“We’re delighted by the response our insurance offering has received from the market. Our proposition of putting the customer in control, value for money and customer fairness is resonating with connected customers who are looking for a better car insurance experience,” said Thomson.

Naked takes a fixed portion of premiums to run the business, with the balance going into a pool to cover claims. Naked’s income doesn’t depend on whether claims are paid or not. This business model resolves the inherent conflict of interest in traditional insurance: that paying fewer claims results in higher profits for the insurer.

Money left over in the claims pool goes to charities nominated by customers rather than towards company profits.

The group’s app app includes functionality such as Naked CoverPause, which enables customers to pause their accident cover if the car won’t be used for a day or more – instantly reducing the premium for that time. Naked said it also uses AI to pay valid claims quickly and repudiate fraudulent or invalid claims to the benefit of its customers.

Read: Hollard invests R20 million in new tech-first insurance startup

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South African AI based insurance startup gets R30 million investment boost