PremierLine, launched on November 6, guarantees that it will be at least 10 per cent cheaper than other insurers, cutting costs through use of a unique underwriting approach.

The Lancaster-based company is backed by the security of Lloyd's of London. Founder Barrie Wells was a pioneer in direct insurance to customers setting up Prospero Direct which later became AXA Direct.

For PremierLine he has developed a ratings system to provide prices which he believes reflect risk more accurately than other models, using at least four times as many factors as traditional insurers in the calculation of risk.

'Buying general insurance direct in the consumer marketplace is hugely popular because it's so simple and reduces costs dramatically,' said Wells. 'SAt the moment, the careful business owner is penalised for the bad performance of other businesses, which I think is unfairSOur targets are businesses with insurers who cannot differentiate between good and bad risks.' Initially the company is targeting small retailers, but is likely to broaden its focus in the medium term. 'We are looking at small, independent retailers with up to 20 employees, but we're not limiting on turnover,' said PremierLine's Alex Stuart. 'We are not targeting wholesalers initially, but will look at them for next year.'