Esure made the decision to pursue the demerger after a strategic review, and the appointment of Matthew Crummack as Gocompare's chief executive.
Shares in the company rose 2.6 per cent in early trading.
The move follows an announcement earlier this year from Esure that it would look at selling Go Compare, having acquired the remaining 50 per cent of the company that it didn't already own in December 2014.
The demerger is expected to cost around £19m, and analysts believe that a standalone Gocompare could be worth between £400m and £650m.
"We believe that a demerger of Gocompare.com from Esure will allow both entities to thrive and reach their full potential," said Esure boss Sir Peter Wood.
"Esure and Gocompare.com are distinct businesses, which are both underpinned by strong brands. A demerger will allow the separate management teams to focus on their independent strategies, and also enhance their ability to align senior management incentives."
Crummack added: "The team at Gocompare.com, which we have strengthened at executive team level since my arrival as CEO in June, is excited by the opportunities that the demerger will provide. We are all focused on the implementation and evolution of the Gocompare.com strategy, which we believe will continue to enhance Gocompare.com's business performance."