Tomorrow Sainsbury’s will once again re-launch their motor insurance business to compete directly with Tesco to up another front in the competitive High Street battle for clients. Sainsbury’s in partnership with RBS Insurance promises a saving of 15% on premiums in the form of loyalty card points through Nectar.
For the next two years, shoppers also can earn loyalty points up to one percent of their bills. The deal comes as average motor insurance is estimated to have increased by almost 30% to just over £815 in the UK in the last year. Tesco has an estimate of 5% of all British motor insurance policies. They are another example of supermarkets in these tough times having to turn to other services in a difficult struggle for earnings.
By using their powerful brands retailers believe they can convince consumers to move from other providers such as the High Street banks that are tarnished. The supermarket’s head of motor insurance Ben Tyte said the company wants to expand and create a significant impact in the marketplace and by using the Nectar card rewarding those that purchase insurance will increase customer loyalty.
Sainsbury’s insurance is said to have increased new business by 25% over the last quarter and reported pretax earnings of £30m. But despite growth in lines of insurance such as homes and pets, they feel Tesco is eclipsing them in the financial services area.
Tesco bought out RBS recently from a financial services joint venture that they now operate on their own. They also plan to offer mortgage lending and addition to current accounts. And because of Tesco’s recent launch of the used car business online, their insurance business should increase.
