AI-driven insurer Naked says it has raised US$17 million (roughly R290 million) in Series B funding, with the International Finance Corporation (IFC) – the largest global development institution focused on private sectors in emerging markets – leading the funding.
Naked also received funding from the German Development Finance Institution (DEG), Yellowwoods and Hollard – with the latter two being original investors.
IFC and DEG are investing in Naked in line with their aim to increase competition in the financial services sector in Africa, foster financial inclusion and make a social impact.
Naked added that the funding presents a significant opportunity to use AI and digital experiences to grow Africa’s insurance market in the coming years.
Naked is a complete end-to-end digital platform, and customers can manage their entire insurance experience online via its app.
The insurance company uses its AI-based system to help consumers with quotes, buying insurance, managing their policies and claiming without the need to speak with a contact centre agent.
Automation also helps the company to significantly save costs, which it can then pass on to the customer in the form of lower premiums.
In addition, Naked has a different business model. Unlike traditional insurer profits that depend on how much is paid in claims, Naked charges a fixed percentage of customers’ premiums. If the claims for a year are lower than expected, the surplus will go to a good cause chosen by the customer.
“We are excited to bring new investors on board in this funding round as part of accelerating our growth plans. This investment validates our position as a pioneer of fully digital insurance in South Africa, and will enable us to grow our team, continue to invest in technology that puts customers in control, and to expand into new markets,” Alex Thomson, co-founder of Naked, said
Adamou Labara, IFC Country Manager for South Africa, said that improving access to insurance products could lead to further financial inclusion in South Africa, as it can preserve assets, increase incomes and limit uncertainties.