Naked, an insurtech company, has secured a Series B funding round of $17 million. This funding round was led by International Finance Corporation and was joined by Yellowwoods, Hollards, and the German Development Financing Institute. This comes more than a year after the business closed a Series A investment, bringing its total funding raised to $31.6 million.
Alex Thomson, Sumarie Greybe, and Ernest North, seasoned professionals in the insurance industry, launched Naked in 2018 to enhance trust and openness in the insurance process.
Users can quickly obtain house and auto insurance using its app and website, and insurance claims are processed more quickly than through traditional insurance providers. In contrast to incumbents, Naked charges a fixed proportion of premiums, with any excess going to the users’ preferred charities in cases where claims are minimal.
The startup’s co-founder Thomson sees the closure of its Series B round as a vote of confidence in its strategy for delivering insurance. He added that it would aid the startup’s staff expansion and market penetration.
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“Since our launch in 2018, we have been overwhelmed by customers’ enthusiasm for our offering and have exceeded our growth targets every year. 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 expand into new markets.”
Adamou Labara, the IFC’s South African Country Manager, added, “Improving access to insurance products is a key driver of financial inclusion in South Africa as it has the potential to preserve assets, increase incomes and reduce uncertainties. IFC’s investment in Naked will help increase the penetration of tech-driven insurance in the country and contribute to job creation and economic growth.”
What Makes Naked Unique
According to Naked, its technology and business model set it apart from other African insurtech companies like Kenya’s Turaco, which received $10 million in September. “In contrast to the traditional model where insurers’ profits depend on how much they pay in claims, Naked charges a fixed percentage of customers’ premiums. In years when claims are lower than expected, the surplus goes to communities and good causes chosen by customers,” the statement said.
This shows that it cared for its clients and wanted to make life easier for them. Unlike other insurers, their charges are fixed, independent of what the client pays.
From a business perspective, it is critical that the Naked, just as it has shown through this funding round, reiterate its commitment to promoting social and economic growth. As it is obvious today, consumers of today base their decisions not only on a product’s price and features but also on the company’s reputation. In their eyes, reputation and social responsibility are gaining significance. More than ever, consumers yearn to do business with reputable insurtech firms. In this aspect, Naked is doing well in gaining the trust of people, as can be seen through their increasing popularity in the insurtech industry.
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How Insurtech Impacts the Insurance Sector
In the past, insurance providers relied on physical locations that required labor-intensive manual work. In contrast with this modern age, insurtech businesses can now run remotely while having employees interact with clients globally. The online business uses a similar operational strategy to a skater but with less overhead.
Now, customers are more engaged in choosing their coverage, comprehending their demands, and receiving individualized care thanks to the use of technology. The future of insurtech is heading towards self-serve, online transactions where clients have their choice of engagement channel, as opposed to having to travel to a branch or speak to a salesperson.
If there are discrepancies in the data, insurtech companies may be able to identify fraudulent activity by utilizing data, analytics, trend analysis, and machine learning. Big analytics might also be able to spot possible openings that insurers might work to plug in to prevent abuse.
Many new technologies are now accessible to better comprehend each person’s genuine needs as a result of the innovative nature of information gathering and data processing. Based on past data, this not only lowers prices but also provides more dependable, constant coverage.