Local artificial intelligence (AI)-based insurtech Naked says technology has resulted in it gaining market share just over a year after it went live.
Naked launched in April 2018 with an AI-based car insurance offering. The company says it aims to give customers a faster, fairer and more flexible insurance experience.
It claims its car insurance offering is built on three core principles: ensure a fair and transparent insurance process for customers; put them firmly in control of their insurance experience; and use AI and automation to lower costs.
The start-up was co-founded by actuaries - Sumarie Greybe, Alex Thomson and Ernest North - who all have backgrounds working for leading insurance companies in SA.
Naked initially received a R20 million investment from private investment firm Yellowwoods and insurance group Hollard.
In December 2018, Yellowwoods and Hollard invested a further R30 million in the insurtech firm to enable it to accelerate its growth and expand into new product lines.
In an interview with ITWeb, North said since launching, Naked has beat its customer acquisition and retention goals, which is why Yellowwoods and Hollard increased their investment in the business.
According to North, Naked plans to diversify into new segments of the short-term insurance market during the course of the year.
"Short-term insurance has lagged other industries in migrating to digital channels, but we believe that most of the personal lines insurance market will move to the digital-only model within a few years," North said.
"We base this prediction on how other industries have evolved over the last five to 10 years, as well as the magnitude of the investment that insurtech is attracting from global reinsurers and other players."
He added that as consulting actuaries, Naked worked with many leading insurers and saw how they were struggling to transform legacy systems in order to deliver truly digital customer solutions.
"We saw the opportunity to build our artificial intelligence system from scratch, creating a new-generation insurance experience. Although there is customer support and emergency assistance available on call, customers conveniently buy and interact with the insurance product via the Web or our app without needing to speak to anyone."
North noted the use of AI and automation to drive Naked's business process not only puts customers in control of their insurance experience, but also lowers the company's operating costs so that it can offer lower premiums.
He explained that technology and automation have enabled Naked to keep its overheads lean, premiums low and customer experience fast and convenient.
"With Naked, customers can go online and get a final car insurance quote in less than 90 seconds, rather than spending hours phoning around for quotes and doing the paperwork with a call centre agent."
Users can use the Naked mobile app, available for Apple iOS and Android, to manage their policies and claim after an accident. The app includes functionality such as Naked CoverPause, which gives users the ability to pause their accident cover if the car will not be used for a day or more, reducing the premium for that time.
"We have recently introduced a new feature that lets car buyers generate a proof of insurance certificate for their car financing company in a matter of minutes. This innovation means someone buying a vehicle on financing can get it insured in as little as five minutes, from getting a final online quote from Naked, to presenting the certificate to the dealer so that they take possession of their shiny new car."
According to North, unlike traditional insurers, Naked takes a fixed portion of premiums to run the business, with the balance going into a pool to cover claims.
"Naked's income doesn't depend on whether claims are paid or not. This business model resolves the inherent conflict of interest in traditional insurance - that paying fewer claims results in higher profits for the insurer. Money left over in the claims pool goes to charities nominated by customers rather than towards company profits."