UK supermarket chain Tesco is continuing to ramp up its challenge to traditional banks, entering into exclusive discussions with Fortis over a partnership to provide motor and household insurance.
The partnership would create around 1500 UK jobs, including call centre roles and involve over £500 million in annualised total gross written premium.
The deal would see Tesco take greater control of pricing and product development, while Fortis would "bring considerable expertise" on underwriting and claims management.
Fortis would replace the Royal Bank of Scotland's UKI Partnerships, which currently underwrites Tesco's general insurance business.
The supermarket is making an aggressive push into financial services as it seeks to take advantage of public disillusionment with high street banks.
In December it bought out the Royal Bank of Scotland to take complete control of Tesco Personal Finance and says insurance will be an important area for the business.
"This is an important strategic move in the development of Tesco Personal Finance under Tesco's sole ownership. General insurance is a key area for TPF and this partnership with Fortis will enable us to take it to the next level," says Andrew Higginson, CEO, retailing services, Tesco.
Final binding terms of the partnership, agreed in principal, are expected to be agreed in the next two months. It could be underwriting new business and renewals from the second half of next year.
Tesco recently outlined plans to open 30 bank branches in its stores by the end of 2009 and is looking to expand into mortgage loans and current accounts.