Honey Insurance Secures $15.5M AUD Seed Funding

Honey Insurance Launches with $11.9 Million USD Seed Funding

Richard Joffe experienced significant difficulties when he sought home insurance after relocating to Australia in 2019, describing the process as reminiscent of practices from three decades prior.

He noted the application procedure was cumbersome, the policy details were unclear, and the insurer operated in a purely reactive manner, lacking proactive engagement. Joffe, the founder of both Park Assist and Stella.ai in the U.S., discovered widespread similar frustrations among Australian residents.

Addressing a Market Need

This realization spurred the creation of Honey Insurance, which officially launches today. The company has secured $15.5 million AUD (approximately $11.9 million USD) in funding, marking the largest seed round ever obtained by an Australian tech startup, as per Crunchbase data.

The investment round was spearheaded by prominent institutional investors including RACQ – the insurer also providing underwriting for Honey Insurance – alongside PEXA, Metricon, ABN Group, Mirvac, AGL, SFG, and Apex Capital.

Notable Individual Investors

A diverse group of individual investors also participated, featuring Zip’s founder and global CEO, Larry Diamond; Afterpay’s co-founder and CEO, Anthony Eisen; former MEBank CEO, Jamie McPhee; Graham Mirabito, previously CEO of Corelogic; Airtasker’s co-founder and CEO, Tim Fung; and Peter Tonagh, formerly CEO of News Corp Australia and Foxtel.

The acquired capital will be allocated towards expanding the team, with plans to recruit 80 new employees within the next year, and to further research and development efforts.

Smart Home Monitoring and Coverage

Honey Insurance benefits from underwriting by RACQ, a leading Australian insurance provider. It offers comprehensive coverage for homes, contents, and landlord properties.

Customers receive $250 AUD worth of smart sensors designed to detect the primary risks to homes: flooding, fire, and theft. These sensors monitor for issues such as water leaks, smoke detection, and the status of garage doors.

Joffe asserts that a substantial portion of insurance claims – around 50% – are preventable, and these sensors play a crucial role in incident prevention. A premium discount of 8% is offered to customers who activate their sensors.

Simplified Insurance Process

The sign-up process for Honey Insurance is streamlined for ease of use. Joffe states that customers can secure insurance in as little as three minutes, with the company deliberately avoiding complex terminology.

Looking ahead, Honey Insurance intends to leverage publicly accessible data and satellite imagery to automatically update policies based on changes to a customer’s property, such as additions or renovations.

Addressing Underinsurance in Australia

Joffe highlighted the prevalent issue of underinsurance in Australia, affecting approximately 80% of homeowners. Last year, 183,000 home claims were either denied or withdrawn, with the average claim totaling $8,400 – a 16% increase year-over-year.

Consequently, Australian homeowners collectively face out-of-pocket expenses of $1.5 billion annually.

Enhanced Policy Features

To combat underinsurance, Honey Insurance incorporates features like a 30% safety margin on the sum insured and four times the standard coverage for home office equipment, up to a value of $20,000.

“Modern households contain significantly more electronic devices than they did two decades ago, and remote work has become increasingly common. Insurance policies should reflect these changes,” Joffe explained.

RACQ’s Investment Rationale

David Carter, CEO of RACQ, stated, “Our investment in Honey Insurance presents an opportunity to participate in innovation and expand the reach of our insurance portfolio, ultimately benefiting our 1.8 million members and the communities they reside in.”