Honey Insurance sets Aussie capital raise record

Honey Insurance capital raise

RACQ-backed home and contents insurtech business, Honey Insurance, has concluded a successful $108 million capital raise – Australia’s largest ever Series A funding round, the company has announced.

The funding round was led by US-based private investment firm Gallatin Point Capital, which has a history of investing in insurance and emerging insurtech businesses.

Honey Insurance founder and chief executive Richard Joffe said the funding partnership would ensure the business had the necessary “firepower” over the next 18 months “to triple revenues, turn profitable, and double headcount to over 200 people”.

“The funding will allow us to further invest in our award-winning product design by making Honey a truly seamless experience from purchase to claim,” he said.

“The calibre of our investors underscores the unique opportunity we have to transform the Australian market, which for too long has been uncompetitive and lacking in innovation.”

Honey recognised the successful capital raise as a “significant milestone” for the company, given the current challenges in the VC space. The company noted that it was achieved in an environment where the Australian technology sector has experienced a more than 50 per cent decline in venture capital investments in 2023, while insurtechs worldwide have seen a more than 70 per cent reduction in funding.

“This mega-round demonstrates that founding teams in Australia continue to compete with the best on the global stage, and positions Honey Insurance as a strong challenger to the local home insurance oligopoly.”

Boasting a fully digital and data-led platform, Honey promises an expedited policy-writing process (delivered “in less than three minutes”), which leverages a combination of public house information, satellite data, and artificial intelligence to estimate rebuild costs.

“As customers sign up for Honey insurance… we prefill and prepopulate all the data on your home, because that exists. And that takes the load off of people who sometimes don’t really know what they’re answering, said Honey chief product and technology officer Simon Farrugia, speaking at FST’s Future of Insurance 2024 event last month.

“The whole experience is designed to be simple, light and rewarding… and you don’t feel like there’s a trust issue.”

Preventative action is key part of the Honey offering. One of insurtech’s unique propositions is the offer to new customers of a complimentary smart home sensor kit to help householders monitor at-home risks, including fire, water leaks, and intrusion.

“By helping to prevent incidents and offering proactive protection, Honey is reshaping the insurance landscape and helping Australians to stay safer, which ultimately reduces the cost of insurance and creates a win-win,” Honey said in a statement.

Farrugia added: “The way we think about things at Honey is that insurance is just a part of what we do.

“What we really think about for our customers is, how do we take total care of their home for them?

Farrugia noted the company’s heavy investment in customer experience.

“We offer true omnichannel experience,” Farrugia said, providing full self-service and contact centre support options.

“One of the things we did that was a non-negotiable… was make sure our contact centre team is armed with the same level of sophisticated technology that a customer can interact with directly online.”

“One of the most important things we did was to make sure we connected [our technology] in a way that enabled our agents to have real-time information, understand what’s happening with that customer in a single view and make sure that all the fundamentals are in place.”

Founded in 2021, Honey has secured 15 exclusive partnerships, including with Metricon, AGL, and Bank of Queensland.

RACQ is also a key backer of the insurtech, serving as underwriter for Honey’s product range.

Welcoming the capital injection, Honey Insurance chair Peter Tonagh, a former Foxtel and News Corporation chief, also highlighted the business’s successful capital raise in what is an inclement investment environment for local insurers.

“Australia’s insurance industry has one of the lowest levels of investment into innovation relative to revenues in the world, and we are out to change that.

“We are leveraging some of the most innovative technology and data platforms globally to better protect the most valuable asset of most Australians – their homes,” Tonagh said.

Over the next 12 to 18 months, Farrugia said the business will focus on building out its capability in its claims process.

“We want to take and continue to build out the dataset that we have to personalise experiences for customers so that more and more there’s a human connection between them and us.”