HBOS is to launch a new general insurance company through a joint venture with esure, the online business established by the UK bank and financial entrepeneur Peter Wood in 2001.
The new business, which will launch in 2004, will complement esure, focusing primarily on the higher premium and non-standard segments of the car insurance market along, potentially, with the small commercial/fleet sector. It will use the Internet as a primary sales channel and will deploy existing esure infrastructure to reduce costs for both companies.
The higher premium and non-standard segments account for approximately 40% of the personal motor insurance market.
Peter Wood, who founded the Direct Line insurance business, will be chairman of the new company and Colin Batabyal, an existing esure director, will be chief executive.
Commenting, Wood says: "The success of esure over the last two years has proved there is clear space within a consumer-led market for new players that are highly focused and efficient. This new venture will bring the same degree of focus as esure to the wider car and general insurance market."
Esure currently claims over 600,000 customers. The company markets car insurance under the esure, Halifax and Sainsbury's Bank brands, and also household and travel insurance in its own name. Wood says the business is ahead of its target of a million customers within five years and will reach profitability during 2004.
He adds: "Although car insurance appears to be a commodity product, many sectors of the market are poorly served, with little choice or innovation on offer. Using the Internet, advanced underwriting and a co-operative relationship with esure, the new business will deliver significant benefits to customers."