Insurance start-up Naked launched last week with a car insurance product based on artificial intelligence (AI).
The product, the creators say, was designed around three core principles: to ensure a fair and transparent insurance process for customers, to put them firmly in control, and to use AI and automation to lower costs.
The creators, actuaries Sumarie Greybe, Alex Thomson and Ernest North, worked for many years at 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,” Thomson says. “We realised we needed 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.
“In addition to supporting positive change in South Africa, it 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,” Thomson says.
Naked is built using AI technology 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.
Naked removes the need for business processes such as call centre sales. AI-based fraud algorithms permit certain claims to be approved instantly, reducing inconvenience and frustration for clients.
The Naked app (available currently for the Apple operating system, but soon available for Android) allows customers to change their cover instantly at any time.