Esure – the new insurance venture from Direct Line founder Peter Wood that is backed by a £150m investment from the Halifax – has received the green light from the Financial Services Authority.

The direct writer has began offering Halifax branded motor insurance and will take over the underwriting and administration of the bank's existing 200,000 motor policies as they come up for renewal over the next 12 months.

Halifax motor insurance is currently underwritten by Churchill.

Esure says the Halifax car insurance product will be competitively priced and there will be a fast claims service.

Executive chairman Peter Wood predicted Esure will have a major impact on the insurance market. He said: “We are determined to be the best and fully expect to be a top five motor insurer within five years, with around one million policies.”

It has plans to grow from 200 staff to 500 within three years.

Esure is being backed by a £150m investment from the Halifax.

The venture has two elements: a call centre operation that has started trading and an internet service that opens later this year.

Peter Wood founded Direct Line Insurance in 1985 and presided over its eventual growth as the UK's largest private motor insurer. He retired from the group in 1997.