Jonathan Russell

Two major supermarkets have withdrawn health insurance offerings following unsuccessful pilots, market sources said.

Sainsbury's Bank and Asda, backed respectively by AIG and Norwich Union, confirmed they had closed their cash plans to new customers.

A Sainsbury's spokeswoman said: "We are pleased with the progress we have made with our innovative concept in health care and with the interest it has generated among our customers.

"But, in the current market, the health product requires greater focus and effort than we feel justifiable."

Penny O'Nions, principal of financial adviser The Onion Group, said the sector was not necessarily suited to supermarket sales.

She said: "The key thing is that the supermarkets were not getting the volume they required."

A spokeswoman for Norwich Union said the insurer might revisit the health market with Asda in the future.

' New entrant to the health market PruHealth has replaced its chief executive, Catherine McGrath, with Shaun Matisonn just months after its launch.

The health insurer is also reported to be offering to split marketing costs on its products with intermediaries in an effort to drive sales.