Sainsbury And RBS Insurance Discussing Insurance Joint Venture

The finance arm of J Sainsbury PLC and RBS Insurance, a division of Royal Bank of Scotland Group PLC, are discussing a multi-year partnership for RBS to issue car insurance using the Sainsbury brand. This five-year joint venture will include claims management, underwriting, and support for sales and service on every new car insurance policy issued under the Sainsbury brand beginning this summer.

RBS Insurance (RBSI) Chief Executive Paul Geddes stated that strength in distribution channels and a proposition for a loyalty card drew RBS to Sainsbury’s Finance. RBS is currently the largest UK auto insurer, with proven results working with different brands and commercial sectors.

Its existing partners include National Westminster Bank PLC, Prudential PLC, and Nationwide Building Society.

Sainsbury is the second largest supermarket chain in the UK. Esure is currently the auto insurance provider for the company. The new deal will replace the ten-year agreement that Sainsbury currently has with Lloyds Banking Group.

Sainsbury Finance CEO David Fisher stated that RBSI brings a wealth of experience, technical expertise, and a strong platform from an operational perspective.

RBSI has reported that heads of agreement have been signed and the parties are working to agree on final contract terms. Though no official word on the value of the deal has been released, it is estimated to be several million pounds.

Billions in government state assistance were provided to RBS during the recent financial crisis. Under EU requirements, RBS must sell RBSI by December 2013.

The two companies are optimistic about the proposed deal. Both companies have ambitious growth plans, reported Mr. Fisher. Together, they plan to offer the same high quality service to customers that they currently provide individually.

Whether individuals in the UK take out car loans or pay cash for their new vehicles this summer, they will have the option to obtain insurance from this new provider.