When Richard Joffe moved his family to Australia in 2019, he said that applying for home insurance “was like traveling back in time 30 years”.
“I found the registration process painful, the fine print was confusing and the insurance company was totally responsive, not proactive. They never contacted me outside of my renewal, ”he told TechCrunch. Joffe, who founded the parking sensors platform Parking assistance and job platform Stella.ai in the United States, started researching and found that many people in Australia shared the same frustrations. This is what prompted him to found Honey Insurance, which today launches with AU $ 15.5 million (approximately US $ 11.9 million), the largest funding round ever raised by a tech startup. in Australia, according to Crunchbase data.
The financing was led by institutional investors RACQ (the insurer that also underwrites Honey Insurance), PEXA, Metricon, ABN Group, Mirvac, AGL, SFG and Apex Capital. Individual investors include Zip founder and global CEO Larry Diamond; Anthony Eisen, co-founder and CEO of Afterpay; former MEBank CEO Jamie McPhee; former Corelogic CEO Graham Mirabito; Airtasker co-founder and CEO, Tim Fung; Peter Tonagh, former CEO of News Corp Australia and Foxtel.
The capital will be used for hiring, with plans to fill 80 positions over the next 12 months, and for research and development.
Honey Insurance is underwritten by RACQ, one of Australia’s largest insurance providers, and offers home, contents and homeowner coverage. Customers receive $ 250 AUD worth of smart sensors to monitor the top three hazards to homes: flood, fire and theft. For example, sensors look for things like leaking water pipes, smoke, and open garage doors. Joffe said half of insurance claims are preventable and the sensors help prevent incidents. As an incentive, Honey Insurance customers get an 8% reduction on their premiums if their sensors are turned on.
The Honey Insurance enrollment process is also designed to be straightforward. Joffe said customers can buy insurance in as little as three minutes and the company avoids confusing jargon. In the long term, Honey Insurance will also use publicly available information and satellite data to automatically update policies if a customer makes changes to their home, such as a new extension or a new swimming pool.
Joffe said another problem in Australia is underinsurance, which affects about four in five Australians. Last year, 183,000 claims were refused or withdrawn, and the average claim amount was $ 8,400, up 16% from the previous year. As a result, each year customers have to pay a total of $ 1.5 billion out of pocket.
To combat underinsurance, Honey Insurance has taken measures such as a 30% safety margin for a client’s sum insured and four times the usual home office coverage, valued at $ 20,000. .
“We have a lot more electronics in our homes than 20 years ago, and we work a lot more from home than before COVID – it makes sense that your insurance policy takes that into account,” Joffe said.
In a statement, David Carter, CEO of RACQ, said, “Investing in Honey Insurance is an opportunity to share innovation and increase the scale of our insurance portfolio to the benefit of our 1.8 million members. and their communities. “