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The benefits of being Naked during lockdown

InsureNaked

A look at how many people have paused their car insurance premium during lockdown.

We have been overwhelmed by the South African spirit during this pandemic; there’s a keen sense of community as many look for ways to help their fellow citizens. Gyms are freezing contracts, landlords are waiving rent payments, and owners of small businesses have gone above and beyond the call of duty to protect their employees’ incomes.

On 27 March we launched an initiative to do our part. For at least three months, everyone in the Naked tribe can reduce their car insurance premium by ±90% for the days they aren’t driving.

As the national lockdown (hopefully) gets closer to its end, we wanted to reflect on this initiative and share the results with you – what its impact has been, and how it has been received.

Thuma Mina moment

We have always offered our customers the option to pause their accident cover. The idea is that if your car is parked for an extended period, you shouldn’t have to pay for car accident cover when you can’t have one. Our app allows customers to pause and unpause their car accident cover whenever they want via CoverPause, and the typical savings is 45 - 50% of their comprehensive premium on the days they aren’t driving.

Before lockdown started our actuaries did a deep dive into the likely effect that the lockdown would have on claims. Previously, the main use for CoverPause was to save some money when going on holiday. The majority of cars with paused accident cover were either parked at the airport or sitting alone at home for an extended period.

During the lockdown, however, most people are at home with their cars most of the time. Car theft is significantly less likely when there are people around – and with neighbours also being on lockdown, surveillance is close to 24/7 for a lot of cars.

Beyond the impact on theft, being present allows customers to take action to prevent, or at least lessen any damage to their cars that may have otherwise happened – caused by things like fires, hailstorms and the like.

Now, if claims are expected to go down it’s only fair that premiums should go down as well, right? After crunching the numbers, our actuaries predicted that claims would drop enough such that premiums could be reduced to about 10% of their normal comprehensive level while the car is not being driven.

How often are people leaving their homes during lockdown?

If we look at the people who paused their cover in the first 24 days of the lockdown, the following graph summarises their patterns of use.

You’ll notice the first grouping says that 43% of those cars have not been used once over the lockdown period. This is the largest group by a fair amount. We’re guessing that these people have their essentials delivered to them, or have another family member doing their shopping for them. Or they might’ve just done a great job of stocking up when the lockdown was announced!

The smallest group, 12% of those cars, have had their accident cover paused for between one and 10 days of the lockdown. Put another way, they have been using their car more often than once every two days. These are likely to be the people who have continued going to work over the lockdown and are a part of essential services helping to keep us safe at home. As much as we’re proud of every South African for doing their part to flatten the curve by staying home, we’re extremely grateful to this last group who are keeping things going in these difficult times.

But the help doesn’t have to end there. There are ways for those at home to help. We suggested to our clients who have made use of CoverPause and who can afford to pass on their savings by donating to the Solidarity Fund. The fund was established by the government to help South Africa through this pandemic. Beyond support for our essential workers, the fund aims to provide care and support to all of those South Africans whose lives have been disrupted by the pandemic.

Siyabonga to our Naked Tribe

In the interactions we’ve had with users over the lockdown, we have been overwhelmed (again) by the good nature expressed. People have gone out of their way to spread the word about the CoverPause initiative and have shared awesome feedback with our helpdesk and on social media. We are so grateful when we see that people are proud and excited to be part of the Naked tribe. Thank you for spreading the love.

One Naked tribe member even went as far as to make sure that their CoverPause saving wouldn’t negatively impact the staff at Naked. We were touched by the selflessness of this.

Looking ahead

Has life as we know it changed? We suppose only time will tell, but a lot of what was normal, won’t be anymore. For instance, we might see some of the restrictive rules relaxed, while some form of social distancing remains in place for the remainder of the year. Many people are also predicting that companies will be open to, or even encourage, work-from-home arrangements on a large scale.

All these things have implications for how people travel. While we’re proud of how the CoverPause initiative is helping people save money during lockdown, we recognise that this is just the first step in adapting to what this pandemic requires of us as a modern financial services provider. We intend to keep innovating, keep adapting, and keep listening.

Stay safe, stay kind.

Team Naked

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