Woolworths has entered the highly competitive car insurance market but insists that, unlike rival Coles, it will not compete on price.

A year after launching its first insurance products underwritten by Hollard Group, the supermarket chain has expanded to car and travel insurance, with a home and contents offering coming in the next few weeks.

In expanding its footprint, Woolworths cited its successful launch of pet and life insurance in August last year. But the supermarket chain has entered a new realm with the competitive, low-margin business of car insurance.

Coles, which launched a pilot car insurance program on Sydney’s north shore last year, has sought to gain market share by beating competitors’ quotes by $100. In June a Coles-sponsored survey claimed insurers were overcharging motorists by $305 million, a figure rejected by motor insurers, who called the claim “ridiculous”.

Hollard Australia MD Richard Enthoven says Woolworths’ offering will not be dictated by price.

“Rather than Coles, which is more of a mass-market strategy, we will be much more focused and targeted on specific Woolworths customers,” Mr Enthoven said.

He says while Coles has targeted specific geographic regions Woolworths has decided on a national launch, using “behavioural” statistics to sell the product online and through call centres.

“Based on our past success, we are very optimistic about the potential for this latest insurance initiative,” Mr Enthoven said.

Much like Coles, Woolworths has sought to leverage its dominant position in the retail space to sell its insurance. Under the car cover offer, customers who make short trips will receive a discount in addition to a 4-cents-per-litre fuel discount with Caltex and Safeway for the first year of their policy.

Hollard has not released any information on sales figures since Woolworths launched pet and life insurance last year. Coles revealed in May that 40-50% of enquiries to its call centre were being converted into sales, with more than 100,000 customers acquired since late 2010.