Can a reverse-auction marketplace for car insurance save you money?
A new app aims to challenge “old fashioned” price comparison sites and hopes to make car insurance more affordable for young drivers.
Honcho is a reverse-auction marketplace which requires insurers to bid against each other for customers, competing for their business in real-time.
The bidding process takes just 30 seconds, goes through three rounds of bidding in real-time and encourages insurance providers to offer the best possible policy and price to the consumer.
During the process insurers can see how much their competitors are bidding for the customer’s business and reduce their own prices accordingly.
Unlike price comparison websites, which charge insurers commissions of up to £60 per policy which is passed onto the consumer within the price they pay, Honcho charges insurers and brokers a flat fee of £1 to compete for each customer. It says this encourages more competitive policy premiums for motorists.
Users are able to request further bids, and the insurer’s or broker’s £1 fee allows them to re-bid for each user as often as asked across a four-week period.
Reducing costs for young drivers
Honcho aims to reduce insurance costs for all drivers, but especially those aged 17 to 24-years-old who typically fork out £1,177 for a policy – 149 per cent more than the typical car insurance policy.
The service is being used by insurance providers who have a particular focus on making the cost of driving cheaper for younger drivers, including Marmalade and Think Insurance.
Honcho also claims it makes finding affordable policy quotes quicker and easier for motorists, as they only need to submit their data once to receive multiple bids.
Price comparison websites have come under increasing scrutiny over the past year for charging insurers expensive commission fees and often preventing insurance providers from offering better prices on their own websites.
Insurers that are bidding for customers’ business on Honcho include Brightside, Flux Direct, Quoteline Direct, Freedom Brokers, Marmalade and Think Insurance, with insurance underwritten by well-known names including Aviva, Axa, LV, Ageas and Zurich. More brands will be added in the coming weeks.
Gavin Sewell, CEO of honcho, said: “Honcho is one-of-a-kind and will be revolutionary for drivers of all ages. However, we’re especially keen to see the benefits to young motorists who, for so long, have struggled to acquire fairly priced policies – with many paying 149 per cent more than the average driver.
“We see Honcho taking on the role of ‘matchmaker’ between customers and insurers or brokers, initially for car insurance, but with a view to offer the service across a range of other insurance products and markets later this year.
“We’re also very much championing consumers’ interests with absolute clarity and transparency in all that we do. It’s going to be the way forward and price comparison websites are going to feel us hot on their heels.”
Andy Martin, broker and distribution director at Marmalade, said: “It’s a very exciting time for all involved – as soon as we heard of honcho’s proposition, we knew we wanted in. This new app has the potential to really shake up the way insurance is delivered and we’re especially excited to be reaching out to more young drivers to help them drive down the cost of insurance with the help of our black box technology.”
Honcho is free to download from both the Apple App Store and the Google Play Store.