Honcho shuts down marketplace
Honcho, a reverse auction marketplace for auto insurance where insurers compete for business by sending users quotes, is shutting down.
The UK-based startup said it found it difficult to acquire customers in a highly competitive space. “The economics mean it’s costing more money to run things that we’re making from selling policies,” Honcho wrote.
Founded in 2016, Honcho raised just over $5 million and it claims to have attracted 30k users. Below is a message the company shared on its LinkedIn page. It appears that the company’s new focus is embedded insurance.
“We’re very disappointed to announce that we have made the difficult decision to close the Honcho marketplace for the time being.
We set out in 2016 to build a value comparison marketplace to help our customers acquire the right insurance product for their needs, rather than simply the cheapest. More than 30 thousand users of the Honcho app suggest there is real demand for this approach.
Well before the FCA was focussed on GIPP and Fair Value, we were building a reverse-auction marketplace that aimed to move the game on from the cheapest premium at all costs and to ensure that our customers received a product of real value to them.
80% of our customers who purchased through Honcho bought a better, more suitable product over the cheapest, meaning that our insurance providers acquired a more informed, higher premium customer than through traditional channels.
At the same time, we delivered game-changing, unique insight and real-time visibility into the marketplace for our insurance partners, allowing them to better understand customer needs and the value being presented to them by the wider market.
Notwithstanding this validation of our premise, the challenge was to bring sufficient volume of customers to Honcho in the face of the £100m+ spent by the big PCWs every year on brand and marketing. Unfortunately, this proved extremely challenging without deploying similar marketing expenditure.
We are hugely grateful to all those who engaged with us and helped us to bring a transformational insurance marketplace to life, from our fantastic team to our 40+ insurance brand partners, our technology partners, and our committed investors.
We’re not hanging up our boots quite yet, however, as we’re now completely focused on our embedded insurance products, which we have been working on for some time.
Embedded insurance allows us to engage more cleverly with customers outside of that marketing lead cycle, at a time when they are purchasing the asset to be insured. The opportunity to present holistic product offerings that seamlessly embed insurance cover to customers with our automotive partners is compelling.”
