HONK, the Los Angeles-based startup providing roadside assistance services through a mobile app, is partnering with the massive insurer Farmers Insurance Group to white label its technology.
People with knowledge of the deal said it could be worth over $150 million to Honk, as it eyes an international rollout, but chief executive Corey Brundage and president Avesta Rasouli declined to confirm or deny that figure.
“Today, it’s less and less about what resources a firm owns or controls, but rather the connections it can efficiently make,” said Rasouli in an email about the new partnership.
Brundage said HONK first began talking to Farmers last June and set up a small pilot with the massive insurance company not long after. It’s the first of several pilots that HONK will look to monetize as it attempts to take a bite out of the global market for roadside assistance services.
The company’s growth has already managed to make industry leader AAA squirm. Writing on the Arena Ventures company blog, a writer chronicled the back and forth between HONK and triple A on a number of fronts — including the venerable roadside assistance company’s attempts to adopt some of Uber’s “dirty tricks” of ride-hailing and canceling.
As the largest trackable, traceable roadside assistance company in the U.S., HONK has at its disposal a fleet of roughly 55,000 trucks (it’s basically the Uber for towing).
Why would Farmers be willing to pay up to nine figures for roadside assistance? Well… the answer lies with how often customers call for that service versus trying to file a claim or pursue any other action with their insurers.
According to Brundage, calling for roadside assistance is what customers talk to insurers about the most. “We will ‘talk’ to their customers more frequently than they do,” says Brundage.
Beyond that, roadside assistance is a huge, fragmented market. According to the market research firm, IBISWorld, customers spend roughly $6 billion on roadside assistance services.
Customers call for a tow directly from HONK via mobile web or the company’s app to find a nearby professional and track the location and estimated time of arrival of their tow truck in real-time. Insurance companies, auto OEMs, and fleets use the company’s transparent platform to reduce wait times by over 50%, improve customer satisfaction, harness their roadside assistance data and receive industry leading net promoter scores, according to a statement.
“We’re very excited about the Farmers deal,” says Rasouli. “And it’s the first of many.”