RSA: gains significant boost from Tesco pet insurance partnership

May 07, 2010 (Datamonitor via COMTEX) -- RSA has announced a new partnership with Tesco, through which it will provide underwriting and claims management for Tesco-branded pet insurance in the UK. This affinity partnership will provide RSA with a larger book of business, thus cementing its development as a leading player in the UK pet insurance market.

Tesco Bank is the UK's largest online pet insurer, with over 700,000 pets insured. Furthermore, it was one of the top 10 pet insurance advertisers in 2009, spending GBP100,000, mostly on direct mailings to its existing customers. While Tesco's pet insurance offering is currently underwritten by UK Insurance Limited (UKI), which is part of the Royal Bank of Scotland (RBS), its customers will gradually migrate to RSA over a 12-month period from Q4 2010.

RSA, which also underwrites Marks & Spencer's pet insurance product, has been pursuing a multichannel approach to its pet insurance business, with a direct presence through its established brand, More Th>n, and through brokers such as Swinton and affinity partnerships. In 2008, the insurer was ranked as the third biggest pet insurance underwriter in terms of gross written premium (after RBS), with premium income of GBP53m.

The Tesco contract is extremely important to RSA's development. Not only will it lead to the creation of 230 new roles within the company, it is also expected to deliver premiums of around GBP100m in its first full year. As a result, Datamonitor expects to see RSA become the UK's second biggest pet insurance underwriter by the end of 2011 (after the Tesco book transfers to RSA from UKI completely).

A larger book of business is a clear advantage in the pet insurance market for RSA or any insurer. Besides the economies of scale that can be obtained in sales and marketing, large books also provide the quantities of claims data needed to enable insurers to detect trends and then tailor underwriting accordingly. Moreover, a larger book of business will also support the necessary in-house expertise that allows for accurate underwriting and smooth claims handling.

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