Freighty wants to make it easier for online shoppers to recoup their money if their parcel is damaged, lost or stolen in the mail.

The one-year-old tech company offers a free API that retailers can plug into their online point of sale, which allows customers to add parcel insurance to their cart at checkout.

Retailers earn a commission on every policy sold, and the startup promises a “hassle-free” claims process that sees customers paid within a matter of minutes with no paperwork or contact with retailers or insurers, thanks to its proprietary underlying technology. Customers can be reimbursed up to the value of $5000 per order.

Freighty co-founder Jason Byrne said he is expecting the API to catch on ahead of the holiday season, when the volume of deliveries traditionally surges.

“Last year alone, Australia Post Group delivered more than 3.3 billion items to over 12 million addresses across the country,” Byrne said in a statement.

“Many of these deliveries were travelling internationally or across states, making lost, damaged or stolen deliveries a very real concern for both retailers and consumers.”

According to Australia Post’s website, most of its services come with up to $100 compensation for loss or damage, and consumers can purchase “extra cover” on items worth more than $100, which includes compensation for up to $5000.

But a 2018 review of Australia Post by the Commonwealth Ombudsman found the postal service had been the subject of numerous complaints related to its compensation policy, including one instance of staff refusing to provide compensation for a lost parcel because “for all we know, [it] could have contained rocks”.

The review also found that the average compensation amount paid had decreased since 2017, even though the volume of claims, as well as parcel delivery rates, had increased.

The rise of “porch pirates” – the term for people who steal parcels left outside of a delivery address, ostensibly in a “safe” spot – has only exacerbated the problem of lost parcels.

For Freighty, however, this has created an opportunity to muscle into the $30 billion e-commerce industry in Australia.

The startup has completed an oversubscribed, initial capital raise of $500,000 from strategic high-net-worth investors, as well as contributions from a Brisbane-based fund manager, Altor Alpha Fund, and Voyager Ventures, the VC arm of a Family Office.

The funds will be used to turbocharge the company’s penetration in the Australian market and scale internationally.

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