Naked’s new funding a ‘vote of confidence’ from investors

Digital-only short-term insurance provider Naked Insurance has secured new funding of R700 million, it announced in a statement on Tuesday.

Alex Thomson, co-founder, told Moneyweb that the funding will partly be used to meet the regulatory capital requirements for coverage in the event of major catastrophes, but also to deepen automation and artificial intelligence — technologies Naked is already leveraging.

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The latest round of financing comes from existing funders Hollard, Yellowwoods, International Finance Corporation, and Germany’s development finance institution. A new funder BlueOrchard – an impact investor – has also now come on board.

“The new round of funding is a strong vote of confidence from both our existing shareholders and our new investor,” Thomson notes

Naked also intends on investing a portion of the funds in product and market expansion, and optimising existing technology for quicker claim turnaround times and products “at the lowest possible costs”.

“We are looking at [developing] new products, but our main focus is investments into tech that can allow us to deliver products even better,” Thomson notes.

Naked was founded in 2018 by Thomson and fellow actuaries Sumarié Greybe and Ernest North. The company offers insurance through a fully digital platform that sells 100% of its car, home, and single-item insurance policies online without any human intervention.

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Naked has experienced “consistently good” growth over the period, Thomson notes. “Overall, we’ve met all the targets we set for ourselves.”

He emphasises that Naked intends to remain digital-only.

“Often, companies start with a business model like ours, but then they end up doing what others do, selling through call centres, or have staff phone clients up and ask why they didn’t buy a product. We don’t do any of that. We’re trying to offer a product similar to Uber and Netflix.”

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Thomson also hinted at a possible listing sometime in the future. “It’s always possible. Although our policies are underwritten by Hollard, we’re a standalone business and listing is one of the options.”

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