My Startup: honcho, Durham
For My Startup this week, we're looking at honcho, who are hoping their reverse auction marketplace will change how people buy insurance.
Durham-based honcho hasn't even launched yet, but its reverse-auction solution is hotly anticipated by consumers. Instead of making people go out looking for the best deal for themselves, the honcho platform means insurers have to bid for your business.
Prices go down instead of up, and customers are given greater power over what they get from providers. Their in-app "honchometer" compares how close each offer is to the option you wanted, and you can watch as providers compete to offer the lowest price.
Founder: Gavin Sewell
Founded: 2016, launching later in 2019
As traditional price comparison sites receive more criticism for lacking in transparency and customers begin to understand their personal value more - and are working harder to find great deals - honcho is hoping to fill a niche with a trustworthy, efficient platform, as well as creating a competitive playing field for insurers of all types.
As they near release, they have already integrated 10 participants, including insurers, managing general agents (MGAs) and brokers - and plan four more to be brought on-board soon.
Why did you start honcho?
The honcho concept was born from a very real need and desire to completely transform the UK insurance landscape for the better.
We believe the current marketplace, dominated by the big price comparison websites, is an unfair and expensive one both for consumers and for insurers themselves.
honcho will be the world's first reverse auction marketplace for car insurance, initially, and will be a digital electronic marketplace that will offer transparent and equitable access for everyone, fully in consumers’ interests and, unlike some big price comparison sites, with no hidden fees or anti-competitive contracts behind the scenes.
We have big plans to expand our technology into other areas of insurance in the future and we can't wait to launch in the first quarter of 2019.
Tell us more about the tech behind the product.
The honcho reverse auction marketplace has been designed and written in the same way that electronic trading systems are created in the banking industry.
Every part of our platform is bespoke to honcho and has been written by honcho and our development partner Hedgehog Lab. While we’re launching with car insurance, we’ve created our technology to be able to apply to any marketplace where goods are sold by multiple providers, and we’re very excited about the breadth of possibility that this technical design gives us.
Where are you at right now?
We're almost there. From the inception of the concept over three years ago, we've been working tirelessly to get the product ready for launch. Working alongside Hedgehog Lab, our platform is almost ready.
We expect to be fully operational somewhere towards the end of quarter one.
We, of course, expect a niggle or two when we launch, and we're looking forward to getting consumer feedback to help us further refine and improve our service.
That said, our testing process has been a rigorous one and the feedback we've been getting from insurers and the public who have been testing the product has been fantastic.
What are your aims for the next year?
To be the number one digital “go-to destination” for affordable insurance in the United Kingdom. We want to establish ourselves in the UK market and help make people's lives more affordable and fair.
We're on a mission to completely alter the way people pick up their car insurance as well as their insurance for their home and contents, their pets, and even their motorbikes and vans.
We want insurers to give our customers the best deal possible by bidding for their business in a way that has never been seen before.
What's been the hardest thing about getting honcho off the ground?
Building any brand-new business is difficult, time-consuming and costly and that is further amplified when you’re creating an entirely new way of working that will totally transform a market.
The hardest thing has been working with the well-established insurance industry to prepare them for working in a very different way from that which they’re used to. Insurers and brokers have been extremely positive about honcho and are super-keen to be involved, however the complexity of linking up all of the systems and platforms across the industry has not been inconsiderable.
Why should more people be using honcho?
Well, we haven't launched yet so ask us that in a few months! But in all seriousness, we hope to welcome people in their thousands when launch and hope to expand the product and reach all corners of the UK.
And we're particularly hopeful that groups such as young drivers will feel some of the biggest benefits of using our service.
Their premiums can be extortionate and we know our platform will help them to get a great price before they take to the roads for the first time after they've passed their tests.
How much will it cost users - and why is it worth the investment?
There’s no cost to consumers use honcho, and this is one of the primary differences between the price comparison websites (PCWs) that they’re used to using, and honcho’s reverse auction marketplace.
In the current car insurance PCW world, insurers are charged a commission by the PCW of around £60 on average, and that cost is normally passed on to the consumer within the cost of the insurance being bought.
With honcho, there is no such commission as we charge insurers just one pound to bid for the consumer’s business, and that's it! Everyone benefits from this - even the insurer has cheaper acquisition costs, which means that they can provide cheaper prices to the consumer.