South African insurance start-up Naked on Tuesday launches with an Artificial Intelligence-based car insurance offering.
The company said its car insurance offering has been 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.
Naked is built from the ground up using AI technology, free from cumbersome legacy insurance systems, with the aim of transforming how customers experience insurance online.
Potential customers can receive a quote, and if it’s accepted, receive cover in three minutes on the Naked website or app, without the need to talk to a call centre.
Its app also allows customers to change their cover instantly at any time.
An example of this is Naked CoverPause, which gives customers the ability to pause their accident cover if the car won’t be used for a day or more– reducing the premium for that time.
Naked has been co-founded by respected actuaries Sumarie Greybe, Alex Thomson and Ernest North who worked for many years with South Africa’s leading insurers, before breaking away to start Naked.
“We saw first-hand how insurers’ focus on underwriting profits overshadows claims handling, premium fairness and customer service,” says Thomson. “We realised that to fix these problems we needed to change how we make money, to remove the inherent conflicts of interest.”
Unlike existing insurance, Naked takes a fixed portion of premiums to run the business, with the balance going into a pool to cover claims.
At the end of each year, money left over in the claims pool goes to charities nominated by customers rather than towards company profits, meaning Naked’s income doesn’t depend on whether claims are paid or not.
Using automation to lower costs
Naked has removed the need for inefficient and costly business processes like call centre sales, resulting in cost savings and ultimately lower premiums for customers.
AI-based fraud algorithms permit certain claims to be approved instantly, reducing inconvenience and frustration for clients and further reducing premiums through lower costs.
“Having been involved in insurance from the inside, we knew we needed to build Naked from scratch, avoiding legacy systems and thinking,” explains Thomson. “We are proud to kick off a new generation of insurance that offers unprecedented user-control, value for money and customer fairness at its core – all the while making a positive change to society.”