The founders of rival BNPL companies Zip and Afterpay have piled into a record $15.5 million seed round for a 10-month insurance company designed for the smart home era.
The seed investment for Honey Insurance was led by an impressive list of institutional investors: RACQ, which is underwriting the challenger brand; property settlement platform PEXA, home builder Metricon, ABN Group, Mirvac, AGL, SFG, REI and Apex Capital.
The individual backers include Zip co-founder Larry Diamond, his Afterpay rival Anthony Eisen, Airtasker co-founder Tim Fung, former ME Bank CEO Jamie McPhee, Corelogic’s former boss Graham Mirabito, and ex News Corp CEO Peter Tonagh, who is also Honey’s chair.
The $15.5 million seed funding will be used to launch the insurtech to consumers, scale the team in the business, which only incorporated in August last year, and for R&D.
Founder Richard Joffe has already successfully exited two previous US-based startups. He co-founded Stella.ai in 2015, stepping down as company chairman in September last year as his focus turned to Honey. The business was acquired as part of a merger with Truststaff and Faststaff earlier this year.
Prior to that he launched Park Assist in 2005, building it for 8 years before it was acquired by TKH.
Joffee, Honey’s CEO, is hoping to disrupt the insurance sector with technology, giving customers smart home sensors as part of their premium to monitor for problems such as fire, water leaks or intrusion.
“We use smart data to simplify a process that’s currently far too confusing than it needs to be, and to ensure our cover is fast and easy to buy, always fairly priced and it’s simple to make a claim,” he said.
The serial entrepreneur said getting home and contents insurance in Australia “felt like travelling back in time 30 years”, which led to the finding a better solution.
“We invest in our customers by giving them smart technology for the simple fact that 50% of insurance claims are avoidable,” he said.
“We believe providing protection upfront is just as important as being there for them in the event of a claim. How many other insurance companies do you know that will literally pay out on day one?”
Aside from getting the product to market, Joffe hopes to add 80 people to the team over the next 12 months.
RACQ CEO David Carter said: “Investing in Honey Insurance is an opportunity to share in the innovation and increase the scale of our insurance portfolio to benefit our 1.8 million members and their communities.”
Metricon CEO Mario Biasin said it was a natural partnership for the builder.
“Metricon creates innovative designs and builds quality homes, and Honey Insurance is setting out to provide Australians with smart technology to keep their homes safe for many years after we’ve handed over the keys,” he said.