A new insurance app has been launched that aims to get drivers a better deal by pitting providers against each other in a live bidding war.
The makers of “reverse auction” app Honcho say that it will challenge traditional price comparison services by allowing insurers to improve their quotes on the fly to win business.
It is initially aimed at improving the offering to young drivers, who pay up to 150 per cent more than the average driver to get insured.
The free app works by allowing insurers to “bid” for business, cutting their prices to win the driver’s custom.
As with regular comparison sites, a driver enters all their details, which are then sent to the insurers who start bidding to secure the customer.
The bidding process takes 30 seconds, goes through three rounds of bidding in real-time and encourages insurance providers to offer the best possible policy and price.
During the process insurers get to see how much their competitors are bidding and can reduce their own prices to try to win.
Users are able to request further bids, and the insurers or brokers can re-bid for each user as often as asked across a four-week period.
Honcho’s makers say its pricing also makes it more attractive to insurers, who pay just £1 per policy, compared to price comparison sites which charge up to £60 – a sum that’s often passed on to the customer.
It is initially focused on getting cheaper car insurance for young drivers but its creators want to expand to offer services to more drivers and across other markets.
Gavin Sewell, CEO of Honcho, commented: “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.”