Start-up insurer Honcho is looking to disrupt the established price comparison sites with its reverse auction style of offering motor policies to customers. However, in its nascent stage, it is unlikely to outshine the aggregators, which currently offer more options and cheaper basic policies.
Using the Honcho app, customers enter details on their profile, car, and desired policy and then receive bids from a panel of insurers. The bids come with a Honchometer score, which indicates how close the offer is to the desired terms. Consumers can then accept or reject the offers.
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GlobalData has compared the 10 cheapest offers from each of the UK’s top four aggregators (MoneySuperMarket, Confused.com, Compare the Market, and GoCompare) with the bids received by the same driver profile through Honcho. The profile used was of a 22-year-old man living in West London, who drives a Volkswagen Polo and has two years’ driving experience with no claims.
The results showed that consumers receive a much wider range of offers on the comparison sites, with only a few provided through Honcho. The best bid from Honcho was priced between the first and second cheapest bids on each of the four comparison sites, making it competitive but not the outright winner. When we reached out to Honcho for a comment, it explained that it was still adding features to its newly launched app and was continuing to expand its panel of providers.
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Honcho’s distinctiveness is achieved through its service, with a slick app that is complemented by its standout premise of making the insurers come to the customers. It is worth noting that Honcho’s offer was only considerably beaten on price by one policy from each of the big four, all of which were variations of the same policy from Hastings. It was also narrowly beaten by two from MoneySuperMarket and Confused.com.
As Honcho is looking to target young, digitally savvy customers and compete with aggregators, price will undoubtedly be key. Its ease of use and unique approach will appeal to many, especially as trust in comparison sites is likely to have dipped following scrutiny from the Competition and Markets Authority, but price will still be the deciding factor for most consumers.
The concern for Honcho is the risk of deterring customers by failing to match competitors for price and variety, despite drawing in many through its extensive post-launch marketing campaign. It will need to address its shortcomings and add new providers soon if it is not to lose the advantage that its compelling new product could present.
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