The deal gives Aviva the exclusive rights to sell three simplified products through the Edinburgh-based Tesco Bank business – life insurance, over 50s life insurance and life insurance with critical illness cover.
Products will be promoted in Tesco’s 2,900 stores but can only be purchased over the phone or online.
David Barral, CEO of Aviva UK and Ireland Life Insurance, said: “This is a fantastic opportunity for two household names to deliver a real benefit for millions of people across the UK who have no family protection in place. We can provide Tesco’s customers with peace of mind, offering a quick and easy way to purchase a range of protection products.”
Barrie Cornes, insurance analyst at Panmure Gordon, told City A.M. that forthcoming changes to the way financial products can be sold – known as the retail distribution review (RDR) – will have influenced the deal.
“In our view the move to RDR – which kicks in at the year end – will lead to more tie-ups between distributors and manufacturers of life products, such as the deal with Tesco.
“Aviva manufactures the product, gives it to Tesco Bank and as long as Aviva receive a certain value for that product then they will be happy. Tesco’s distribution makes it seem like a good deal for Aviva.”
Aviva has had a troubled year, with a fall in its share price culminating in the resignation of chief executive Andrew Moss amid a row over his pay deal.