Tesco Takes Fortis on as Insurance Partner

1st July, 2009

Tesco has struck a deal with Fortis, taking on the Belgian-Dutch financial services group as one of their insurance partners. Fortis is set to sell car and household insurance policies to Tesco customers in the UK.

The partnership has been agreed upon in principle at the moment, but if the deal ultimately does go through, it's anticipated to create 1,500 new UK jobs. On the other hand, the deal would also mean that UKI Partnerships - the Royal Bank of Scotland (RBS) - owned group and Tesco's current insurance partner - would lose its role.

Tesco's 50-50 joint venture with RBS started coming to an end last July, when Tesco spent £950 million buying RBS out of their partnership. A spokesperson for the grocer said that since the buy-out, it was always Tesco's aim to find a different insurance provider in order to underwrite policies.

Tesco and Fortis are expected to discuss final terms of the deal over the next two months - and if it's successful, new policies will be underwritten by the second half of 2010.

Andrew Higginson, Tesco's chief executive of retailing services, told the Times Online that the joint venture would offer a range of new insurance products to Tesco customers.

Tesco currently sells insurance, credit cards, loans and long-term savings accounts through Tesco Personal Finance. Last month, the grocer also opened its first branded Tesco bank inside one of its stores, which will sell mortgages, insurance, and current accounts. Tesco currently receives £500 million a year in gross premiums from insurance sales.

Fortis already provides insurance policies for Marks and Spencer, and recently took on the role to sell car insurance for John Lewis. The financial services provider also holds contracts with Alliance and Leicester and the Post Office to sell travel insurance policies across the UK.

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