Reformed convicts can now sleep easy at night following the launch of new household insurance from Highway Insurance and Fairplay Insurance Services which covers people with criminal records.

The new policy pays 15% commission to retailing brokers. Cover includes buildings and contents insurance as well as legal expenses. Plans are to extend this range to motor insurance and financial services.

The firms plan to promote the policy in prisons, at charities and with numerous probation services.

Fairplay managing director Chris Jordan said: "A growing number of people, especially those with convictions, are being excluded from a whole range of insurance products.

"The industry must be more flexible towards insuring people with convictions because they might not necessarily represent a high risk."

The two firms estimate that a third of all men and one in ten women have been convicted of non-traffic crimes by the age of 40. Home Office statistics show 100,600 people in England and Wales received custodial sentences in 1998, while 482,700 received fines.

Highway active underwriter Quin Lovis believes, along with Fairplay that the insurance industry is increasingly moving away from covering non-standard risks, and is creating a pool of people who can only obtain insurance at very high rates or not at all.

Highway Home Insurance underwriter Tim Woodford said: "The industry runs the risk of forcing the Government to introduce legislation which will ensure that everybody obtains fair insurance."

The policy is on a point-scoring basis. A probation officer has helped advice Highway and Fairplay to create a psychological profile of potential policyholders so that they can ascertain the risk of re-offending. Also, if customers have a particular conviction, a corresponding exclusion may be written into the policy.