Norwich Union (NU) will underwrite Leeds & Holbeck building society's first motor product, launched this week.
NU beat eleven companies, including Rubicon, AXA and Cox Insurance, to win the underwriting contract and to help the building society.
Leeds & Holbeck head of general insurance Richard Baker shrugged off the potential threat of retail affinities: "We will do a better job than Tesco in terms of dependability and affordability. Although we will not be the cheapest around we may eventually compete on that level."
The building society will insure mainly older customers. Clients looking to insure specialist vehicles will be referred to Yorkshire-based broker Smart & Cook.
Baker said: "We anticipate reasonable support from our customers and will build up a reasonable portfolio."