Naked Insurance received more than R700m in its latest funding round backed by a group of international investors, putting the digital start-up in a position to expand its business and technology platform.
The SA-based insurance technology (insurtech) platform, which uses artificial intelligence (AI) to offer cover for cars, homes and other valuables, said it raised $38m (about R706m) in a Series B extension funding round.
The company received increased support from existing backers insurance powerhouse Hollard, Yellowwoods, International Finance Corporation (IFC), and Germany’s development finance institution (DEG). New to this crop of backers is impact investment house BlueOrchard.
This transaction sets a new record as the largest insuretech fundraise on the African continent. Until now the biggest such capital raise was 2023’s R400m series B capital raise for Pineapple Insurance.
Co-founded by actuaries Alex Thomson, Sumarie Greybe and Ernest North, Naked uses AI and automation that enables customers do all of their insurance business online — including claims management — a far cry from traditional phone and form-based business.
Customers can get a final insurance quote “for their home, its contents, their stand-alone items or their car in less than 90 seconds, and switch or pause their cover, all online, without speaking to a contact centre agent”, Naked said.
The firm’s automated operations means fewer staff and the lower costs that are passed on to customers.
Naked said it will use the new funds to fuel its 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.”
The company recently announced that it is setting up a “cell captive”, which means its cover will be underwritten or guaranteed by the Hollard Specialist Insurance company, but Naked is required to provide the regulatory capital needed to act as protection for policyholders, or a buffer, that allows Naked to pay claims even in extreme loss scenarios.
“This investment marks an exciting milestone as we continue to define a new category of insurance,” said Thomson in a statement.
“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 SA consumers for embracing this new generation of insurance and to our investors for their trust in our vision.”
This is Naked’s largest funding round to date. In 2021, Foundry — Naspers’s SA-focused tech investment fund led the firm’s $11m Series A, offering $8.3m. In 2023, the company raised another $17m in a Series B round.
Insurtech is a growing segment in the already fast growing financial technology (fintech) sector. Besides the initial investment in Naked, Naspers has also invested R34m in Ctrl, an online company that provides short-term insurance advice.
Sanlam and MTN are jointly building and developing digital insurance and investment offerings across Africa, using the mobile operator’s insurtech platform aYo and insurer’s financial services expertise.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.