Naked Insurance, a relatively young start-up, is now SA s first full-scale operational insurer to relinquish operating profits through a company structure that co-founder Alex Thomson states to solve the “existing conflict of interest” inherent within insurance. Naked Insurance is one such start-up of its kind, having been established by seasoned entrepreneurs wanting to start a new company. The company intends to utilise cutting-edge technologies to reduce operational costs and also increase profit margins through better real estate and property management and risk management. The company’s primary product line is property insurance.
Property insurance is one of the niche products of Naked Insurance. The company is focused on high-risk properties in South Africa such as mansions and farms, commercial and residential buildings and even farmlands. The company has several partnerships with international banks and funds management companies, offering better mortgage rates for its customers. With these relationships, the company believes it can leverage its position to grow and extend its remuneration while reducing its overall cost base, one way being through reducing its premiums.
The co-founders envisage their services to encompass all aspects of the property insurance industry in South Africa. The company has several facilities, including an integrated database management system that will allow clients to submit claims from anywhere in the world and access advice from experts, should the need arise. Another facility is its claims monitoring service that it plans to roll out across all of its operations starting from next month. In this capacity, Naked Insurance will be able to trace claim origins, determine the value of the claim and take remedial action if the claim is valid. The co-founders also say they plan to expand into other areas of the insurance industry in the future.
Naked Insurance already has more than 100 agents in South Africa. The business has diversified into other areas such as life and disability cover, home and pet insurance, travel insurance and now car insurance. While many short-term insurers have focused primarily on property coverage and are unable to provide policies to the extent required by Naked Insurance, the company says it remains committed to offering comprehensive coverage to customers in areas that it serves. Including automobile coverage would offer the company more business, the company notes. Its goal is to continue to build on its expertise in the short-term insurance market while preparing itself for the future of the property and casualty insurance market.
The co-founded company is currently funded by private investors and has no capital funding as of yet. Though the co-founders declined to reveal how much money they have invested in the business so far, saying only that it was minimal, the company does have several million dollars of credit from various sources. And while it is relatively new in South Africa, Naked Insurance has established a distribution network in Durban and Cape Town. This is part of its strategy to enter into the property and casualty insurance market in the country. Although most short term insurers have concentrated their marketing efforts on urban areas and capital markets in South Africa, Naked Insurance has made efforts in the suburbs of Cape Town, South Africa’s second-largest city.
Like all mobile insurance providers, Naked Insurance also follows multi-line selling and cross-selling techniques. With a focus on selling its product and providing an easy to use the single-line application, the company claims to have reduced the application and claims processing time of its competitors. The company also claims that its easy to use single-line application is capable of processing claims in the shortest time possible. The company further claims that its single-line application will provide better customer support. Most of the competition of the short-term insurance market is based on claims settlement and discounts and the process is generally considered by many to be longer and more tedious than that of the conventional policies. By following the fast and convenient application procedure and providing quick and efficient service, the Naked Insurance business model has become extremely popular with most business owners.