ASDA is seeking a new partner to back its life insurance products after ending a three-year deal with Scottish Widows.

The supermarket said that it had parted ways with Scottish Widows after a meeting on Friday at which both sides agreed that “Asda could probably better develop its life insurance offer with a new partner”.

However, Nick Kirwan, protection market director at Scottish Widows, indicated that the financial services firm had been unhappy about the growth of its business with Asda.

“You do need to make sure that the information is very prominent and you need to do more than just putting out a leaflet,” he said.

Mr Kirwan added that the complexities of life insurance and the fact that, unlike motor insurance, it is not a compulsory purchase, meant that it was not well suited to the low-profile advertising used by supermarkets to sell financial services.

Asda said that it was committed to offering life insurance as part of a package of financial services including motor, pet, travel and home insurance, all of which are underwritten by Norwich Union.

A spokeswoman said: “We have been happy with where we got to with Scottish Widows, but three years down the line we have got a lot of experience and we want to take that and sharpen our offer and move it on.”

The contract has been put out to tender.

Britons buy about one million life insurance policies a year, down from two million three years ago. Four in every ten policies are sold via the internet or direct mail, and supermarkets account for about half of these sales.

Supermarkets have been eager to drive up their share of the financial services market and are now estimated to reap £48 million a year in life insurance premiums. Asda has lagged behind Tesco and J Sainsbury.

Kevin Carr, head of protection strategy at Lifesearch, the life insurance broker, said that supermarkets had struggled to sell significant volumes of life insurance, despite their success with other financial products, because it was a more expensive and longer-term product.

He said:“The problem with the supermarket approach is that they don’t give sufficient information for the consumer to make an informed choice, but policyholders can’t complain to the Financial Ombudsman if they don’t get the right product because they bought it without taking advice.”

Andy Bond, Asda’s chief executive, is keen to develop financial services as part of his plans to revive the business, which recently has missed sales and profits targets set by its American parent company Wal-Mart.

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