Finding a competitive price for car insurance has become easier over the years. Traditionally, customers approached brokers. Then the direct players and price comparison websites stole the show.
But now a startup plans on disrupting the market again with a reverse auction marketplace that allows drivers to notify insurers that they are looking for car insurance. The app, which was launched on 27 August this year, provides a platform for car cover providers to compete for clients by offering the cheapest quote they can provide.
Honcho claims that it will help to reduce premiums for all drivers but admits that younger drivers are predominantly its target audience. With youngsters more willing to embrace technology to find a financial product that suits them, this concept makes a lot of sense and is bound to generate some interest, particularly as insurance for younger drivers is so costly.
The app is available through the Apple Store and Google Play Store and offers the convenience of providing details through scanning of driver’s licenses.
While it does sound like a convenient offering for younger drivers the question remains whether it will be an attractive venture for insurers. After all, if insurers want to bid on the system it’s not free – Honcho charges companies £1 per auction and even then, there’s a chance that they could be outbid.
However, Honcho does point out that this is a far cheaper proposition than the £60-per-policy that price comparison websites charge. This could drive costs down further as it means insurers won’t have to pass on any of those costs to their customers.
But there are still a couple of disadvantages to the app. Like most fledgling businesses it doesn’t quite have everyone on board just yet. Providers that have signed up to the service include the likes of Nova Direct, Adrian Flux Telematics, Freedom Brokers, NCI Insurance, Flux Direct, Think Insurance, Brightside and Marmalade.
It’s not surprising that Marmalade is one of the first to sign up onto this platform. It too caters for younger drivers. With its partnership with Ageas, it is underwriting car sharing solutions and provides learner and student driver insurance.
With so few providers on board it means that Honcho can’t quite yet claim that it will undercut everyone on price. It admits as much too.
Still it’s leadership can’t quite resist a little dig at price comparison sites and highlight on their home page that they embrace transparency in all they do and ‘adopt no tricks, hidden commission or nasties…’
Whether its offering will wipe out insurance price comparison sites altogether remains to be seen. With just a few days after launch it has already had 2,600 newly registered users to boast about.
It’s a startup so of course it’s still early days. Honcho has already admitted to getting some positive as well as negative feedback.
The negative comments relate to customers relaying that they didn’t get a competitive quote, which Honcho has said is ‘disappointing’. But it looks like they’re not going to give up so easily.
Honcho adds: ‘However they say feedback is a gift and of course we want to hear what everyone thinks of honcho, but the reality for any tech startup is that not everyone will be perfect or fully complete on day one.’
They’ve promised to add more insurance providers onto their platform over the coming weeks and fixing bugs that have been identified. They’ve clearly got their work cut out for them, but they’re certainly a business that competitors should be keeping an eye on.