Pavilion Insurance will launch its own in-house premium finance facility for customers on 1 April.
Pavilion chairman and chief executive Andrew Selby said the £470,000 that the company raised from its recent placing of 9,090,909 shares on the AIM market would fund the new facility.
Selby said: "This is an important development which will increase business retention, facilitate new business and increase revenue.
"Funds from the capital raising will help this project as well as give us money to pursue further acquisitions of small, niche scheme-based books of business," he added.
Selby said that by the end of the year, 60% of its customers would be online.
He added that by April 2005, all internet customers will receive their policy documentation and schedules "instantaneously" once they clicked ‘buy'.
"We are fully compliant under FSA rules but because of the strict regulation on intermediaries giving advice, we do not advise like a broker.
"Anyone buying our product is given the main facts on what the policy offers, the exclusions and the price.
"This is more than many online providers offer," he said.