Naked raises $38m to transform insurance in South Africa

Naked, a South African insurtech firm has secured $38 million (about R700 million) in its latest funding round to redefine insurance through tech.

Naked’s Series B2 funding round was joined by global impact investor BlueOrchard, with pariticipation from existing backers Hollard, Yellowwoods, International Finance Corporation (IFC), and Germany’s development finance institution (DEG).

According to Alex Thomson, co-founder of Naked, “It’s a strong vote of confidence from both our existing shareholders and our new investor, BlueOrchard. Their support validates the success of our business model and highlights the significant progress we’ve made in making insurance more accessible and convenient. Building off the base of a loyal community and unique technology platform, we are positioned for strong growth in the years ahead. We’re deeply grateful to South African consumers for embracing this new generation of insurance and to our investors for their trust in our vision.”

Launched in 2018 by actuaries Alex Thomson, Sumarié Greybe, and Ernest North, Naked has raised several funding rounds to reimagine insurance. In 2021, Naked raised $11 million led by Naspers Foundry to help fund its expansion goals. Naked used the funds to support its growth plans and to rebuild insurance for social good.

In February 2023, Naked raised $17 million from International Finance Corporation (IFC) , the German Development Finance Institution (DEG), and Naked’s original investors, Yellowwoods and Hollard also participated in the funding round to enable customers to obtain final insurance quotes in under 90 seconds and buy cover online, submit claims, or pause accident coverage, all without the need for any phone calls.

As the only platform in South Africa selling 100% of its car, home, and single-item insurance policies online without human intervention, Naked has demonstrated rapid scalability. Its proprietary technology not only translates into convenience and cost savings to benefit the user, but enhances risk selection and pricing to ensure profitable unit economics.

Beyond its technological edge, Naked’s distinct business model, the “Naked Difference,” sets it apart. Unlike traditional insurers, Naked takes a fixed percentage of premiums and donates any surplus from unclaimed funds to causes chosen by its customers. This structure eliminates conflicts of interest in claims processing, fostering trust by ensuring valid claims are handled fairly and promptly. This has proven to be critical in establishing Naked’s brand as a modern, purpose-driven alternative in an industry often perceived as rigid and transactional.

The new funding will fuel Naked’s growth by deepening its investment in automation and AI, product and market expansion, and enhancing advertising to attract and grow its customer base. Additionally, the funds will be used to meet the regulatory capital requirements tied to the rapid growth and evolution of Naked’s business.

BlueOrchard says its investment aligns with its goal of leveraging digital innovation to enhance financial inclusion.

“Naked’s focus on using technology to expand access to insurance fits perfectly with our InsuResilience Investment Fund strategy,” says Richard Hardy, Private Equity Investment Director for Africa at BlueOrchard. “This funding will help Naked broaden its reach and develop new products that strengthen the financial resilience of its customers.” 

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