In 2006, Crispin Moger, his father Nigel and business partner Nigel Lacy realised "the British car market was stalling. Young people in particular were less willing to buy new cars." Moger realised the reason was rising insurance costs once a younger driver had paid for cover they could typically only afford an old banger. He sensed an opportunity.
He spoke to some underwriters about how to bring down insurance costs. "The main thing they are worried about is personal injury involving young drivers. If someone is seriously injured it is very expensive for the insurer as they pay for legal costs, care and compensation."
But they also conceded that, "thanks to better braking systems and materials, new cars do a better job at protecting passengers than old cars. Also young people often take more pride and drive more carefully when they own a brand new car." By the end of the year, the trio had a broker in place and were ready to launch a firm that would offer cheaper deals to young drivers of new cars Young Marmalade.
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With industry experience from a previous car business, they were able to exploit existing contacts with carmakers to line up discounts for younger drivers. "It wasn't easy. Car manufacturers don't want to undercut their dealers, but we managed to persuade them that we would bring a new type of customer."
Fiat agreed first then Ford and Renault. Their next big challenge was to promote their insurance product to potential customers. With a tiny budget (they started the business with only £110,000), they looked for cost-effective ways to let young drivers know about them. They joined road safety campaigns and entered young business awards.
As sales ticked upwards the group began working on their next product: insurance for provisional licence holders. "The traditional way of insuring a learner is that a parent puts them as a named driver on their insurance, which is expensive." Again Moger spotted a gap in the system. "Learner drivers are actually very safe because they are always accompanied."
Moger spoke to underwriters and managed to get them to craft him a new policy. Provisional Marmalade duly launched in 2009. Smart marketing moves, such as ensuring their marketing leaflets came with the learner plates sold at Halfords, has helped them shift more than 50,000 policies in the last three years.
That success allowed the trio to work on their latest product, Intelligent Marmalade. This business places a telematics device in a car to record its speed and behaviour, like a black box in a plane. If youngsters drive carefully they will pay lower premiums. "About 20% of new drivers crash in their first year, but that still leaves a large majority who don't. At the moment that majority are being punished with higher premiums."
The system also tackles a key factor behind rising insurance costs fake whiplash claims. "The box measures G-force, so in certain instances it can tell us categorically that whiplash could not have happened." In 2011 annual group sales passed £3.5m. With a business now valued at £10m, Moger is working on his next move taking Marmalade overseas.
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