Martin Saarinen

Smart plan for cheaper car insurance is welcome as premiums continue to rise

FOR car insurance, 2018 started roughly where 2017 left off; with prices continuing to rise.

The past few years have seen a steady rise in premiums thanks to a number of factors. Average repair costs have skyrocketed by more than a third in four years due to new cars featuring lots of expensive tech. Vehicle theft has gone up, too, while insurance fraud still remains an issue for the industry.

There’s also insurance premium tax that’s risen from six to 12 per cent in recent years. All this has left drivers facing average bills of about £485, according to the Association of British Insurers, although some price comparison sites claim the average is actually closer to £1,000.

Insurance is inherently based on risk, with various providers viewing risk differently. Go on a comparison site and you can easily see how vastly your risk profile varies, along with your quotes.

But what if rather than viewing risk as an entirely negative concept, motorists could actually turn it into a commodity? Uk-based start-up honcho is looking to create the first ever ‘reverse auction’ in the UK car industry market later this year, allowing insurers to bid for drivers’ custom through the honcho app.

Price comparison websites charge insurers a commission, but insurers will pay honcho £1 for the right to bid as many times as they like for a single driver. This would bring premiums down as insurers compete to offer the best price.

It’s refreshing to see companies such as honcho challenging the idea that prices can only go up.

“Insurers pay honcho £1 for the right to bid as many times as they like for a single driver”