DEG invests in South African online insurance platform

DEG is providing South African online insurance platform Naked with USD 4 million in equity capital. This new injection of capital will support the company’s growth by deepening its investment in automation and AI, product and market expansion, and enhancing advertising to attract and grow its customer base. DEG first invested in Naked in 2023. The total volume of the current round of financing is approximately USD 38 million. The investors also include global impact investor BlueOrchard and the existing backers IFC (a member of the World Bank Group), Yellowwoods and Hollard.

AI-powered technology allows wider access to insurance cover

South Africa’s first entirely digital insurance platform offers private customers insurance policies for cars, buildings and other objects of value. Naked was launched in 2018 by actuaries Alex Thomson, Sumarié Greybe and Ernest North. Its AI-powered technology makes it easier for customers to gain access to insurance coverage as well as making it more affordable and transparent. Using a digital end-to-end platform, customers can manage everything via an app – from obtaining an offer, taking out and administering an insurance policy to submitting claims.

Naked not only sets itself apart through its technology but also through its business model. Unlike other market players, the company takes a fixed percentage of premiums and donates any surplus from unclaimed funds to causes chosen by its customers, such as local communities or charities. This structure eliminates conflicts of interest in claims processing, fostering trust by ensuring valid claims are handled fairly and promptly.

Contribution to financial transformation in South Africa

As Monika Beck, member of DEG’s Management Board, explains: “The improved access to insurance cover is an important engine for financial transformation and inclusion in South Africa. With Naked, we are investing in an up-and-coming company whose innovative business model is making it easier for many people to access affordable insurance cover. In this way, we are playing our part in helping technology-driven insurance services to penetrate the South African market and to generate economic growth.”

“This investment marks an exciting milestone as we continue to define a new category of insurance,” says Alex Thomson, co-founder of Naked. “It’s a strong vote of confidence from both our existing shareholders and our new investor, BlueOrchard. Their support validates the success of our business model and highlights the significant progress we’ve made in making insurance more accessible and convenient. Building off the base of a loyal community and unique technology platform, we are positioned for strong growth in the years ahead.”

As one of the largest European development finance institutions, DEG also helps to drive forward digitalisation and transformation in its partner countries and supports tech-based business models. These include ‘InsureTech’ companies like Naked, which use digital technologies to provide services in the insurance sector.