Startup Naked Insurance uses AI Tech to Offer a Different Kind of Car Insurance
Naked Insurance which launched yesterday, is making use of AI technology and automation to lower costs for customers.
Naked, which offers car insurance, was co-founded by Sumarie Greybe, Alex Thomson and Ernest North, all actuaries with experience working for some of South Africa’s leading insurers.
“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.”
According to their press release, 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.
“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.”
Naked is also adopting a unique take to the traditional insurance model. 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.
“In addition to supporting positive change in South Africa, Naked GiveBack means that paying less in claims cannot grow our bottom line, so customers can be confident that their claims will be paid fairly and efficiently,” says Thomson.
They are also hoping to change 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.
Customers will also be able to change their cover instantly at any time and to even pause their accident cover if the car won’t be used for a day or more– reducing the premium for that time.