Startup Honey to tackle Australia's underinsurance problem with BOQ tie-up

Startup Honey to tackle Australia's underinsurance problem with BOQ tie-up

Honey Insurance CEO and founder Richard Joffe.

Sydney-based smart home insurance provider Honey Insurance has signed an agreement with the Bank of Queensland (ASX: BOQ) to offer tech-led home insurance products to the ASX-listed company's 400,000 customers.

Offering lower premiums for house and contents insurance to customers who install its smart technology, Honey aims to help households avoid accidents like fire, theft and water damage through its home sensors.

Founded in 2020 by US entrepreneur Richard Joffe, the co-founder and CEO of US-based Park Assist and Stella.ai, Honey raised $15.5 million in June 2021 in a seed round led by led by institutional investors RACQ, PEXA (ASX: PXA), Metricon, ABN Group, Mirvac (ASX: MGR), AGL (ASX: AGL), SFG, REI and Apex Capital.

“Honey is well placed to be the fastest-growing tech company in Australia this year, and it's a combination of being in the right place at the right time and also giving Australian consumers a truly unique offering that is clearly resonating with homeowners,” CEO of Honey Richard Joffe explained to Business News Australia when asked if he was surprised at how quickly the company has taken off.

“Australians have a huge appetite for innovation and change, and we are thrilled with the way they are reacting to this tech-led approach.”

After arriving in Sydney from Silicon Valley in 2020, Joffe was surprised at how little innovation there had been in the Australian insurance industry. Having witnessed the shake-up of the US insurance industry five years earlier, Joffe spotted a gap in the market for a company to take on what he considered as the established insurance oligopolies.

Partnering with Australian homeowners to offer ‘smarter’ insurance, Joffe believes the business is just getting started in terms of the products it will eventually provide.

“Honey and BOQ are strongly aligned given our desire to challenge the incumbents, give customers an experience that truly 'wows' them, and lead the industry in digitation,” said Joffe, whose business has already announced five partnerships since it launched.

“BOQ had an appetite to challenge the industry and to work with a company that really wanted to shake things up, and we couldn't be happier to have found a partner in BOQ that shared the same values as us.”

Joffe, currently overseeing the team’s scaling from 30 to 100 staff during a hyper-growth phase, understands why the insurance industry is back in the spotlight following the recent Queensland and NSW floods.

“There is no denying that the flooding has once again raised awareness about underinsurance. One of the things that Honey has been trying to address is the underinsurance issue in Australia,” Joffe said.

“It is heartbreaking that 80 per cent of Australians are currently underinsured. We are on a mission to make sure that all Australians have the right level of cover for their home by using AI and triggers along the journey to help our customers ensure they have adequate coverage.”

One of Australia's leading regional banks, BOQ differs from other banks as local owner-managers run most branches.

As the first bank to launch Honey’s services in Australia, the Brisbane-headquartered bank continues its digital transformation strategy, which came to the fore following the arrival of current CEO and managing director George Frazis in 2019.

Tapping up its investors for $275 million in 2019, the raise was used to help fund a strategic overhaul of the bank as part of a comprehensive digital transformation strategy to provide a clear pathway to a scaled, common cloud-based digital retail bank technology platform.

The partnership with Honey plays an essential role in BOQ’s strategy of elevating its insurance offering through innovation and digitisation, which only accounted for 5.6 per cent of the BOQ revenue in 2021.

BOQ, the owner of Virgin Money since 2013, acquired ME bank in February 2021 for $1.325 billion, which was fully funded through an equity raise. ME Bank is a branchless retail bank that provides a wide range of banking products to customers through mobile bankers, direct channels and brokers.

“As a group of challenger brands, we love partnering with businesses that challenge the status quo,” group executive of retail banking and CEO of ME Bank Martine Jager said.

“Honey identified there was a need for an insurance product that provides a different kind of cover for Australian homeowners. With Honey’s tech-led preventative solutions for the home, like sensors that help to protect you from avoidable accidents, it is the first of its kind in the Australian market.  

“We’re really proud to be the only bank in Australia offering this to our customers and look forward to working together to make a difference to our customers’ insurance experience.”

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