Unsecured loan provider Lombard Direct is to break into the home and motor insurance markets.

The phone and internet-based company, which also offers credit cards and savings accounts, announced the move on Monday.

Lombard Direct will give existing customers an initial 5% discount on their premiums.

Commercial director David McCreadie said many Lombard Direct customers used their loans to pay for home improvement or for new or used cars.

"There is a strong demand for us to provide home and motor insurance," he said.

He said Lombard aimed to offer customers "one of the cheapest quotes in the market".

HSBC insurance analyst David Hudson said another entrant into the sector, which already has enough capacity, would shorten the hard market.

"After many years of not making money, it was going to become more profitable, so it's not surprising it's attracting new entrants," he said