Naked Insurance, a South African Insurtech announced that it has raised $17 million in a Series B funding round led by International Finance Corporation (IFC). Other participants in the round include German Development Finance Institution (DEG) and earlier investors Yellowwoods and Hollard, South Africa’s largest privately-owned insurance group.
The new equity investment will support Naked’s strategy to expand its digital insurance offering, including to more first-time insurance buyers, and allow it to continue innovating to improve customer experience.
In 2021, the artificial intelligence (AI)-driven Insurtech startup raised R160 million (US$11 million) in a funding round led by Naspers
While South Africa boasts the largest and most established insurance market on the African continent, the country primarily sees high demand for life and funeral insurance. Nevertheless, Naked is expanding access to a range of insurance products beyond these traditional options, circumventing the need for expensive distribution or sales channels and passing on a substantial portion of the resulting cost savings to customers in the form of reduced premiums.
“We are excited to bring new investors on board in this funding round, as part of accelerating our growth plans,” said Alex Thomson, co-founder of Naked. “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.”
“Improving access to insurance products is a key driver of financial inclusion as it has the potential to preserve assets, provide protection and risk-sharing, and reduce uncertainties,” said Adamou Labara, IFC Country Manager for South Africa. “IFC’s investment in Naked will help increase the penetration of tech-driven insurance in the country and support the growth of the insurance sector to enhance economic growth”
With the aid of an AI-driven online sales system, Naked can achieve enhanced efficiency and convenience, provide more affordable rates, and cater to a larger customer base in comparison to conventional insurance firms.
Ingo Schultz, Vice President at DEG Insuretech Global Markets believes that Naked is well positioned to drive digital transformation and inclusion in the South African insurance industry because of its unique technology and innovative business model.
“We recognize the enormous commercial potential in increasing access to insurance through the use of smart technology. We’re excited to partner with Naked, not only as the leader in this space but also as a business that will have a significant positive social and developmental impact,” he adds.