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RACQ-backed insurtech promises 'sweeter deals' for Australians

Insurtech Honey Insurance has launched today targeting the home and contents market, having secured $15.5 million in seed funding from its underwriting partner RACQ and other institutional investors

Queensland-based mutual motoring body RACQ, which has an insurance arm offering car, home and other lines, says the investment and underwriting partnership with Honey are complementary to its business offerings.

“RACQ is pleased to be partnering with Honey Insurance as it innovates, helps customers reduce risk in their lives, and delivers peace of mind,” RACQ Group 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.”

According to Honey’s website, it is currently offering products for homeowners, renters and landlords.

Founder and CEO Richard Joffe told the insurtech aims to achieve $500 million to $1 billion in premiums in five years' time, or 10% market share.

The business currently employs 20 staff who are all based in the Sydney office and is looking to expand to 100 employees after a year.

Mr Joffe, who co-founded two start-ups in the US, says he came up with the idea to launch the insurtech after moving here in 2019 from the US.

He says his experience buying insurance in Australia transported him back to 30 years ago, with the process slow and unsophisticated. According to him, insurers in Australia are not customer-centric and not utilising data effectively to improve customer experience.

“We want to use technology and services to truly reduce risk in people's lives and blow them away compared to what they are used to,” Mr Joffe told today.

“It took two years to investigate the idea, to speak to local underwriters, to speak to potential partners who are also customer-centric, to study the international market to understand what would or wouldn't work here.”

He says Australians “deserve a sweeter deal,” which is why he has named the insurtech Honey Insurance.

He believes Honey differs from rivals, including incumbents, through its heavy emphasis on using technology to reduce a customer’s potential risk exposure.

For instance, home insurance customers will receive smart sensors to detect preventable incidents such as fire, water damage and theft.

“At Honey Insurance we invest in our customers by giving them smart technology for the simple fact that 50% of insurance claims are avoidable,” Mr Joffe said.

“We believe providing protection upfront is just as important as being there for them in the event of a claim.”

Home insurance customers can potentially enjoy premium savings of up to 8% every year if they keep the sensors turned on, Honey Insurance says on its website.

Asked if Honey Insurance is available to customers in north Queensland, Mr Joffe said: “We have national coverage.”

Honey’s other institutional investors include builder Metricon, energy provider AGL, Afterpay co-founder and CEO Anthony Eisen as well as Airtasker co-founder Tim Fung.