Firms such as Asda, Tesco and Argos are upping the stakes, according to a report
The newcomers are beating their established rivals in the home insurance market, according to a quarterly survey.
The market is worth more than £5.3bn a year in annual gross premiums and competition is rapidly increasing.
According to the Consumer Intelligence quarterly index of home insurance premiums, many of the most competitive providers are relatively new entrants and include companies such as Asda, Tesco and Argos.
Consumer Intelligence's research found that the most popular way in which to purchase home insurance is direct from the insurance company - with 56.18% of respondents choosing to do so.
One in five said they bought their policy from the bank or building society that gave them their mortgage, and one in ten from the broker who organised their mortgage.
A further 10% bought their cover from a general insurance broker.
The report looked at three key areas of customer satisfaction:
Overall, the industry scored well in all three areas. Using a scale of zero to five to measure satisfaction levels, the sector scored 3.5 for trust, 3.2 on how caring it is towards its customers and 3.5 in terms of whether people would recommend their current providers to friends.
Saga Services, Co-operative Insurance and Frizzell were among the top ten providers in terms of looking after their customers.
Frizzell and Saga were also among the top ten companies that people would recommend, along with esure and RIAS.
A better service, along with price, and better cover are the main reasons people change providers.
The Consumer Intelligence quarterly index of home insurance premiums looks at the purchasing habits of people when buying home insurance.
The research looks at how long customers have been with their current provider, how they rate the level of service they receive from their provider, and the factors that determine which provider they choose, as well as when to switch providers.
The research was carried out among 5,750 people over the internet between April and June 2004.
The aim of the study was to identify consumer trends, which home insurers can use to strengthen their relationship with customers and improve their overall proposition.
Top 10 insurers in customer care
1 Co-operative Insurance
2 Saga Services
3 Barclays Insurance Services
6 Cornhill Insurance
7 AXA Direct
8 Direct Line
9 Lloyds TSB