Online insurance start-up OneDegree raises HK$200 million to fund push to cover Hong Kong’s dogs and cats
The purely online insurer raises the biggest amount to date for a pre-revenue insurance start-up in Hong Kong as it awaits licence approval
Home-grown online pet insurer OneDegree has raised HK$200 million (US$25.5 million) from a number of investors to finance its plan to offer insurance cover to more than half a million dogs and cats in Hong Kong.
The company co-founded by former JPMorgan banker Alvin Kwock Yin-lun in 2016 is among the first batch of purely online insurers applying for a licence via the Insurance Authority’s fast-track scheme. It plans to offer a range of general insurance products, with a focus on medical insurance cover for the 510,000 cats and dogs in Hong Kong.
With the licence application in the final stages, Kwock has raised HK$100 million from Series A funding. And the investors have committed to provide an additional HK$100 million after the licence is granted. It is the biggest amount raised to date by a pre-revenue insurance start-up in Hong Kong.
“The funds raised are to meet the capital requirements of the insurance licence as well as for our technology investment and other business development,” Kwock said in an interview.
The Insurance Authority requires general insurers to have at least HK$10 million of capital, but can set the bar higher in cases where an applicant is generating higher premiums. In the case of OneDegree, the regulator set the level 10 times higher than the minimum requirement, which is why the company needed to raise HK$100 million in funding.
“When the premium size gets bigger, so does the capital requirement. That is why we got early commitments from investors to give us continual financial support,” Kwock said.
Kwock refused to disclose the list of shareholder because it is subject to regulatory approval. But he said it includes some well-known insurance and technology investors.
Brokers have speculated that the fundraising may have been led by some technology unicorns such as Tencent and Alibaba, who have been very active in financial technology investments recently.
OneDegree will also use the funds to develop its technology platform. It will not hire any agents, instead allowing people to insure their animals via the internet and a mobile app.
Pet owners will be able to open digital accounts for their dogs and cats, where their health information can be stored and claims made via their mobile phones, with no need to fill in any paperwork.
“There are over 510,000 dogs and cats that are kept as pets in Hong Kong but only 3 per cent of them are covered by pet insurance. This is much lower than the 30 per cent in Sweden, 20 per cent in Britain and 10 per cent in Japan. This gives a lot of growth opportunities in pet insurance in Hong Kong,” Kwock said.
“Digital insurance is very popular in overseas markets. We believe it will also be popular in Hong Kong because the running costs are lower and customers can buy policies and seek claims much more easily than the traditional way.”
Kwock said his company’s sizeable fundraising indicated a lot of investors share the view that digital insurance is the future of the business.
“The way insurance products are sold, and the way claims are made have not changed a lot over the past 100 years. But new technologies and the advent of the smartphone is changing how we sell insurance products and handle claims,” he said.
OneDegree is one of the five start-ups of Cyberport – the Hong Kong government’s tech incubation programme – to have raised more than US$10 million.
George Lam, chairman of Cyberport, said the funds raised by OneDegree represent an important milestone.
“As a key driver of digital technology development in Hong Kong, we are definitely excited to see local fintech start-ups like OneDegree successfully securing recognition from renowned institutional investors and attracting sizeable funding that will enable faster growth,” he said.