Naked, a South African digital insurance platform leveraging artificial intelligence for instant coverage, has raised R700 million ($38 million) in Series B2 funding, led by global impact investor BlueOrchard.
This funding round, the largest insurtech investment in Africa, also saw participation from existing backers, including Hollard Insurance Group, Yellowwoods investment holding company, International Finance Corporation, and DEG, the German development finance institution.
Launched in 2018, Naked’s platform allows customers to purchase car, home, and single-item insurance policies entirely through a mobile app, eliminating the need for human interaction.
Using advanced AI algorithms, the platform assesses risk and generates quotes within 90 seconds, while also enabling users to submit claims and adjust coverage directly through the app.
Naked’s automated underwriting system enhances risk selection and pricing efficiency, contributing to profitable unit economics. Notably, the platform processes all insurance sales without human involvement, distinguishing it from traditional insurers in the South African market.
“This investment marks an exciting milestone as we continue to define a new category of insurance,” said Alex Thomson, Co-Founder of Naked.
The newly-secured funding will be used to further develop Naked’s AI capabilities and ensure compliance with regulatory requirements.
Part of the investment will fund the creation of a cell captive structure within Hollard Specialist Insurance, requiring Naked to hold capital reserves to cover extreme loss scenarios.
The company operates on a fixed-percentage revenue model, redirecting surplus funds from unclaimed premiums to charitable causes chosen by policyholders. This approach helps mitigate potential conflicts of interest in claims processing.
“This investment marks an exciting milestone as we continue to define a new category of insurance. It’s a strong vote of confidence from both our existing shareholders and our new investor, BlueOrchard,” said Alex Thomson, Co-Founder of Naked.
Richard Hardy, Private Equity Investment Director for Africa at BlueOrchard, adds:
“Naked’s focus on using technology to expand access to insurance fits perfectly with our InsuResilience Investment Fund strategy.
This funding will help Naked broaden its reach and develop new products that strengthen the financial resilience of its customers.”
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