Norwich Union (NU) and Alexander Forbes Corporate Risk Solutions (AFCRS) are gearing up to make an aggressive push into the SME market with a new business model.

The launch of Project 4Tune will see the roll-out of a project that the two companies have been piloting in NU's Perth office.

It will target the small end of the SME market, primarily commercial outfits with less than £1m turnover and £1,000 brokerage.

Roger Brown, chief executive of AFCRS, said the company was attempting to streamline processes to create a more efficient model with a higher standard of service.

"With 4Tune we are able to provide very small businesses with a level of professional service that is usually available to larger organisations," he said.

During the 18-month pilot project with AFCRS the Perth office transferred 3,000 commercial policies to the new unit, NU said.

Ken Wallace, NU director of intermediary business, said the project could encourage more insurers to re-evaulate small end business models.

"This is a model I think the bigger brokers could develop with other insurers to be more cost-effective."

It is understood that the deal is not an exclusive deal between AFCRS and NU, meaning that the broker could set up similar arrangements with other insurers.

The move will increase competition in this sector of the SME market. Groupama is already focusing its energies in this area.

A spokesman for Groupama said it was not afraid of the competition. "With four million businesses operating at this end of the market there are a number of opportunities."

Brit is also preparing to enter the small end market with its own offering. It is looking to beef up its presence in that sector using a combination of technology and people.