Tesco and Fortis team up to form Insurance Partnership
Supermarket giant Tesco is continuing its expansion into financial services by agreeing a partnership with Fortis, which will form a new motor and household insurance company.
Tesco, which has a 30% share of the grocery market, already offers credit cards, savings accounts and insurance via its Tesco Personal Finance (TPF) brand and announced plans late last year that it could be offering mortgages later this year.
Last month, Tesco announced it was opening a finance centre in Glasgow with the creation of 800 jobs.
The supermarket hopes to take advantage of the lack of confidence in existing banks by attracting disillusioned customers.
Meanwhile, the joint venture, to be called Tesco Insurance Limited, will create over 1,500 jobs in the UK with both companies investing £100 million each in the new partnership, which will be owned 49.9% by Tesco and 50.1% by Fortis.
Under the new deal, Tesco will be in charge of retail pricing, sales and marketing, customer service and new product development.
Fortis will underwrite and handle claims, and the agreement will add another 1.5 million motor and household customers to Fortis UK’s existing customer base of around 7 million people.
Commenting on the partnership, Barry Smith, Fortis UK CEO said: “Our strategy is to grow Fortis UK profitably by extending the reach of our products and distribution while remaining true to our high service, low cost ethos. This deal does exactly that.”
TPF was launched in 1997 as a joint venture between Tesco and Royal Bank of Scotland and has 6 million customers in the UK, Ireland, Hungary and Poland. However, last summer, Tesco bought out RBS‘ 50% share in a deal worth £950 million.