So, a "Reverse auction" system for car insurance? This can go one of two ways:
1. It is completely price driven, exacerbating the problems of the industry with "new customer only" pricing in year one to get people on board and then leave insurers trying to recover the losses in subsequent years and being pilloried for their "loyalty tax" on renewals.
2. Be more than just based on price and try to give customers the right cover for their money. Insurers could optimise risk, cover and premiums and get the market back to profitability after almost 25 years of losses. More difficult but ultimately the right thing to do.
It's a great idea and it could be REALLY good but I have the horrible feeling it will be.....
You work it out!
A start-up, which raised £850,000 in investment, aims to challenge price comparison websites by creating a ‘reverse auction’ marketplace for car insurance. Honcho will allow insurers to pay £1 for the right to bid as many times as they like for an individual customer through a market place that is designed to encourage insurers to reduce the price of their premiums in order to attract customers. The app aims to act as an alternative to price comparison websites by reducing high commission charges and passing on the savings to honcho customers, to further drive down car insurance premiums.