InsurTech Naked Looks to New Markets After $17M Series B

South Africa’s Naked has raised $17 million to tap into the world’s growing InsurTech market.

The Series B funding, reported Wednesday by TechPoint, will help the company enter new markets, invest in new technology and expand its team.

Alex Thomson, Naked’s co-founder, said the investment — led by International Finance Corporation (IFC) — “validates our position as a pioneer of fully digital insurance in South Africa.”

The 5-year-old company, which lets users buy car and home insurance from its app and website, says its differentiator is the approach it takes to premiums. It charges a fixed percentage, and when claims are low, the excess goes to causes of the customer’s choice.

Adamou Labara, the IFC’s South African country manager, noted “improving access to insurance products is a key driver of financial inclusion in South Africa as it has the potential to preserve assets, increase incomes and reduce uncertainties.”

PYMNTS explored that issue last year in a conversation with Ted Pantone, CEO and co-founder of Kenya-based InsurTech Turaco, who said many of the people in the markets where he does business — Kenya, Uganda and Nigeria — are uninsured.

It’s not for a lack of insurers, Pantone explained, but rather that traditional insurance companies are “focused on the top five, 10% of the market.” And because the legacy approach centers on agents selling individual policies, they have to sell costly products in order to earn enough commission, he added.

Turaco, on the other hand, uses a digital-first approach centered around partnerships to advertise, sell and ultimately deliver insurance policies.

“It works really well because it’s a nice new revenue stream for all the partners that we work with, without them having to do a whole lot of work for it,” he said. “And it’s a very effective model for us because it enables us to achieve a lot of scale very quickly.”

The Naked Series B comes at a moment when funding for InsurTechs — a term for companies that take a technology-first approach to insurance — is growing, as PYMNTS wrote last month.

According to one report, investments in the sector more than doubled between 2019 and 2021, up from $7.2 billion to $14.6 billion worldwide.

The same report showed that InsurTechs are committed to boosting user satisfaction by leveraging a digitally enhanced customer experience. These efforts appear to be paying off, with a survey finding that InsurTechs outperformed traditional insurance companies in terms of speed and visual appeal to consumers.