Naked Insurance app
Naked Insurance app

Naked, the artificial intelligence-driven insurance provider, has announced that its customers will continue to pay just 10% or so of their usual premium on the days that they ‘pause’ their accident insurance cover until 30 September this year.

This follows Naked’s decision when the lockdown was announced to offer this higher premium saving until 30 June for customers who use its CoverPause feature. The average customer would usually pay roughly 50% of their comprehensive cover rate when CoverPause is active.

Customers simply activate the CoverPause feature on the Naked app to freeze their accident cover on the days that they are not driving to benefit from the reduced premium. They remain covered for theft, mother nature and similar risks to a stationary vehicle while CoverPause is active.

 “When the lockdown was announced, we wanted to do something to help our customers during these difficult times. Our actuaries calculated that the risk and claims would be significantly lower during the lockdown, so substantially reducing premiums on CoverPause for this time was the right thing to do,” says Alex Thomson, co-founder of Naked.

“The number of claims reported continues to stay relatively low, and is only expected to pick up gradually over the course of the next 3 months, as the economy comes back to life. We have thus decided to extend the special CoverPause rate for an extra three months. The normal CoverPause rate – which sees customers save about 50% on their premium on the days they are paused – will resume for all customers on 1 October.”


Unlike conventional insurance companies, Naked earns its revenues from a fixed percentage of customers’ premiums. This flat fee means that Naked’s profitability doesn’t depend on how much it pays out in claims.

“Our incentives are different from a traditional insurer,” says Thomson.

“When claims are low at the end of a financial year, we would usually pay the surplus in the claims pool to causes customers care about. But in this circumstance when we knew ahead of time that claims would be especially low, we decided to proactively pass the saving directly to all customers who use CoverPause when they aren’t driving.”


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