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How this Newcastle tech startup plans to disrupt the car insurance market

In our latest North East app development spotlight, we look at how Newcastle tech startup honcho is turning to alternative means of funding to market its idea to disrupt the car insurance market.

Creating the UK’s first ‘reverse auction’ market-place for car insurance, honcho is designed to reduce costs for drivers.

With the app allowing insurers to bid for consumers’ business and compete to offer best-value packages, it hopes to shakeup the current marketplace by ultimately decreasing dependence on price comparison websites (PCWs) - which work on a fixed-quote model.

Unlike PCWs, which charge insurers large commissions, insurers pay honcho £1 for the right to bid, enabling them to reduce premiums for consumers.

Gavin Sewell, CEO of honcho, explained: “We believe honcho can revolutionise the insurance market.

“It benefits both customers and insurance companies, helping to end the blight of spiralling insurance costs which are causing misery for many, especially young motorists.”

Mr Sewell believes honcho will act as a ‘matchmaker’ between customers and insurers, a service which, in the long-term, can stretch beyond the realms of car insurance alone and into all corners of insurance comparison.

Like many new businesses trying to innovate in the region, honcho is seeking to secure enough capital to market its innovation.

However, when it became apparent that funds from the European Investment Bank (contributed to by all members of the EU) would not be released for the foreseeable future, the new business decided to pursue alternative funding means.

The business has started a crowdfunding campaign on CrowdCube, where it aims to raise £650k.

And Mr Sewell believes that such practice will be a vital source of capital for many new and expanding businesses after Brexit.

He commented: “Businesses cannot afford to wait for political negotiations to decide if funds allocated to UK regions will be released.

“The JEREMIE 2 fund alone was meant to invest £120m into businesses such as ours, and this was only one of the funds targeting regions of the UK meaning that potentially thousands of businesses are losing out.

“Crowdfunding is the logical and immediate solution for innovative tech startups such as honcho looking for alternative funds, and also gives UK investors the chance to support enterprises and get in on the ground floor of exciting new ventures.”

As things stand, honcho is due to launch into the car insurance market in 2018.

Mr Sewell added: “We believe that through crowdfunding, our future customers have a chance to take a stake in a company that will make their lives better as well as hopefully offering a healthy return on their investment.”

You can learn more about the honcho concept and its crowdfunding campaign by clicking here. At time of publishing, honcho has raised £287k via the platform.