Peter Wood, the industry guru hired by Halifax to set up its new internet insurance venture, says the initiative will have an even bigger effect on the industry than his old company, Direct Line.
Wood expects the £150 million venture to move into profit within three years. "It's the most exciting project I've ever been involved in," he said at last week's launch of esure. "The massive opportunities of web selling are not understood fully by many people."
Wood said that only such an exciting opportunity would have tempted him "to come out and play again." Halifax's 21 million customers "offer very favourable loss ratios and the internet's low expense ratio means we will have one million motor policies and £300m premium income within five years, making us a top five motor insurer."
Wood said pricing on certain lines would be 10-15% cheaper than any current direct seller. And as well as motor and household esure will target small businesses, which he said "are poorly served at the moment."
Wood's new boss, Halifax chief executive James Crosby, said: "Peter Wood is a mould-breaker. He has changed the structure of the UK financial services market before, and with esure he will do so again."
He added: "The great new channel businesses in financial services are not going to be built by 23-year-olds in garages. They are going to be built by experts, and we have just got the very best. He is 'The Differentiator'."
Esure is expected to begin trading in 2001 and will employ up to 500 people after three years.
R&SA will continue to partner Halifax for household insurance sold in branches.
One door closes, another opens
Just minutes before Halifax announced its internet plans to the Stock Exchange early last Thursday morning, a senior executive telephoned Churchill chairman Martin Long to say their underwriting partnership was over.
The 135,000 motor policies Churchill had been handling for the bank were to be transferred next year to Peter Wood's new baby, esure. Churchill was not surprised, having been warned by Halifax that a strategic review was under way.
But while one door was shutting, an even bigger one had opened just a few weeks before. Though not yet officially announced, Churchill has won the contract to supply over a million Nationwide customers with their household insurance. The previous partner, Norwich Union, hands over to Churchill in early 2001.
"It's always disappointing to lose a partner," said Churchill managing director John O'Roarke. "But Halifax has spoken positively about us and the Nationwide account is many times larger than Halifax's."