A Wharton School MBA graduate is bringing his insurance-tech startup to Philadelphia, after the Pennsylvania Insurance Department issued approval for Honeycomb to write policies statewide. The fast-growing Israel-based digital insurer has built proprietary technology specifically for multi-family properties – including apartment buildings, condominium complexes, and multi-family homes.
Honeycomb raised $15.4 million in a Series A led by Ibex Investors, the company announced in January, and already insures more than $1 billion in assets.
The company says this segment of the property insurance market lags behind others in its adoption of digital technology and that it is attempting to reinvent landlord insurance with technology that eliminates the need for on-site physical inspections to assess risk, instead utilizing satellite imagery, computer vision, artificial intelligence and machine learning. Itai Ben-Zaken, co-founder and CEO of Honeycomb, said the technology condenses what has been a weeks-long process that can frustrate landlords and condo associations, and the brokers who serve them.
Honeycomb plans to open an office in Center City sometime in the second quarter, targeting a local co-working space near Rittenhouse Square due to its central location. Ben-Zaken said it will initially house marketing professionals but could also ultimately include underwriters and software engineers.
“We're looking for a first hire there, who would be basically a local marketing representative working with local brokerages,” Ben-Zaken said. “But we're also looking at potentially leveraging some of the talent that we have access to in University of Pennsylvania because we have a very strong network there.”
Ben-Zaken said Philadelphia is a meaningful market for Honeycomb because it has a large number of potential clients in an underserved market — landlords who own a handful of small- to medium-sized multifamily properties.
“If you have thousands of units under management, then usually you have some sort of deeper relationship with insurance carriers and you get special pricing,” Ben-Zaken said. “But if you own two or three brownstones, then usually you don't get anything and it's very hard for you as a landlord to find good insurance."
Ben-Zaken added that they expect Pennsylvania to be a faster growing market for them compared with other states.
"So that's why we would want to have local presence. And we also found that in the locations where we have people on the ground, we're able to move business a lot faster," he said.
Ben-Zaken started his career in Israel as a software engineer. He spent two years in Philadelphia before earning his MBA from Wharton in 2008 and then moved to Silicon Valley where he worked for Boston Consulting Group and QuinStreet, where he was first exposed to the insurance industry. In 2013, he started his own software company in Israel called Comprendi, an AI-driven digital marketing company that used algorithmic developments to target social media users, particularly on Twitter.
In 2019, Ben-Zaken started Honeycomb, largely driven by his desire to get back into the insurance business and his close relationship with Wharton professor Ron Berman, who served for some time on the company’s board of directors. His co-founder on the venture is Philadelphia native Adam Cherubini, a Denver-based insurance executive who serves as chief revenue officer. The two met originally when Ben-Zaken worked at QuinStreet.
Ben-Zaken and Cherubini spent time researching the space and then brought the broader founding team onboard.
“Initially, we sold policies as an agency, but really interacting with customers and learning firsthand from them,” Ben-Zaken said. “Tell us what you want, tell us what's working, what's not working, and we learned a lot from that. We always had the vision that we want to start our own insurance company and currently we're operating as [a broker] but in practice it is very similar to a regular carrier.”
The next step was finding the right insurance carrier and capital partners, which led to the beginning of what Honeycomb is now — a digital insurer specializing in multifamily property in the U.S. It became licensed last July and is already in six states — Illinois, Arizona, Michigan, Wisconsin, Ohio and Pennsylvania. The company plans to be in 14 states by the end of 2022.
Honeycomb currently has 35 employees in Israel, the U.S. and Poland. Ben-Zaken said the company is insuring more than $1 billion in assets. He declined to discuss specifics about profitability but said it is moving in the right direction.
"For a startup company that just raised $15 million, it's usually something that doesn't become profitable immediately because we're really investing in growth right now,” Ben-Zaken said. “So we're investing in growth. But I think what we're seeing is all the right indicators that this is a business that we can sustainably grow and eventually make it both a big business and profitable.”
