Royal Bank Insurance Services has begun its integration of NatWest Insurance Services following Royal Bank of Scotand's successful £10bn takeover of Natwest bank.

Natwest Insurance Services' 900 staff were told on Monday that they will become part of a new mega-insurance division within RBS. The division includes the successful direct writer Direct Line, which has three million customers.

Natwest and RBIS had combined revenues of £191m last year, and 1.7m customers. This is still less than the 5th largest broker, Jardine Lloyd Thompson at £232m.

The new division is to be headed by Ian Chippendale, currently group chief executive of Direct Line, who becomes the most senior insurance man in RBS.

Andy Cornish, formerly chief executive of Green Flag, another RBS company, will head a new join management team overseeing both NatWest Insurance Services and RBIS.

Bob Taylor remains head of operations of NatWest Insurance Services, and Eric Galbraith stays as managing director of RB Insurance Services, which has 300 staff.

Ian Chippendale said the bank's insurance division will be an "arm's length" entity.

And he said it was envisaged that both banks' insurance broking arms would remain as separate organisations – at least in the short term.

But he stressed their future was currently under review.

"We are looking at how to take both operations forward. There is a lot of work to be done in mapping out how we move ahead," he says.

Chippendale believed Andy Cornish's brief would be to generate extra revenue from NatWest Insurance Services and RBIS from both banks' existing customer base.

He did not think they would step beyond their immediate banking market to compete for other insurance customers.

"Their sole role in life is to provide personal insurance services for RBS and NatWest banking customers. But I believe we can make more from this arrangement by combining the skills of both insurance organisations. The game plan is to work harder providing more products to both banks' existing customers," says Cornish.