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Naked Raises $38M to Redefine South African Insurance

Mature person signing the pension plan contract for a retirement package to ensure future income, agreeing to terms and planning a pension growth. Elderly man signs banking documents.

This new funding follows Naked’s achievement of raising $17 million in a Series B round in February 2023.

South African insurtech firm Naked has raised $38 million (R700 million) in its Series B2 funding round, marking its largest capital raise to date and a notable achievement in a sector that has seen limited activity in recent years. This milestone underscores the company’s impressive growth since its founding in 2018, with consistent investment backing. The round was led by global impact investor BlueOrchard, with continued support from Hollard , Yellowwoods, the International Finance Corporation (IFC), and Germany’s DEG .

Naked’s latest R700 million in Series B2 funding builds on previous milestones, including R20 million in seed funding in 2018 and R160 million in Series A funding in 2021. This consistent support reflects strong investor confidence in Naked’s innovative, digital-first business model.

Founded by actuaries Alex Thomson, Sumarié Greybe, and Ernest North, Naked stands out with its fully digital platform that leverages artificial intelligence (AI) and automation. Customers can receive final insurance quotes in less than 90 seconds, purchase coverage online, and even pause accident insurance—all through a simple, paperless process via its intuitive app.

Naked is the only platform in South Africa that provides 100% online car, home, and single-item insurance policies, with no need for human intervention. This tech-driven approach allows the company to scale quickly while ensuring cost-efficiency and transparency.

The funding comes at a time when South Africa’s insurance sector has shown remarkable resilience amid high interest rates and inflation. The country’s largest insurers, which control over 80% of the market, have maintained robust capital positions, highlighting the stability of the industry.

Despite South Africa having the highest insurance penetration in Africa, notable gaps persist: around 70% of vehicles on the roads lack insurance, and life insurance adoption is below 10%, excluding funeral cover. Naked tackles these issues with accessible and affordable solutions, providing a new alternative for underserved customers.

The Company’s “Naked Difference” business model eliminates traditional conflicts of interest by taking a fixed percentage of premiums and donating unclaimed funds to causes selected by customers. This model aligns with the industry’s growing focus on sustainability and innovation, fostering trust and transparency while addressing economic inequality.

The new capital will also enable Naked to stay ahead of regulatory changes, such as the implementation of IFRS 17 and the growing demands for stronger liquidity risk management by the Prudential Authority. By increasing investments in AI and automation, Naked aims to maintain its leadership in governance and efficiency amid an evolving regulatory environment.

“This investment represents a major milestone as we continue to reshape the insurance landscape,” said Alex Thomson, co-founder of Naked. “It’s a testament to the confidence both existing and new investors have in our model, validating our progress in making insurance more accessible.”

BlueOrchard’s participation underscores its commitment to using technology to drive financial inclusion. “Naked’s innovative use of technology to broaden insurance access aligns seamlessly with our InsuResilience Investment Fund strategy,” said Richard Hardy, BlueOrchard’s Private Equity Investment Director for Africa.

Although Naked’s primary focus remains South Africa, its AI-powered platform and customer-focused model offer a potential blueprint for underserved markets such as East Africa, where insurance penetration is considerably lower. The company’s innovative approach presents a strong foundation for tackling market challenges and unlocking growth opportunities across the region.

With an eye on the future, the new capital will help Naked expand its product range, enhance advertising strategies, and ensure regulatory compliance as it continues to scale. By combining cutting-edge technology with a purpose-driven business model, Naked is poised to redefine the South African insurance landscape, fostering trust, accessibility, and resilience for a more sustainable future.

SOURCE

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Written by Grace Ashiru

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