Supermarket loyalty schemes are driving sales of insurance, UK retail giant Tesco says.

The chain offers loyalty cards for its supermarket and banking businesses, with the latter handling insurance sales through the retail outlets.

“We have continued to see strong evidence of the additional loyalty demonstrated by Tesco customers who have a number of banking and insurance products with Tesco Bank,” the company said in a statement with its latest set of results.

“Clubcard [loyalty scheme] points with a value of more than £100 million ($151 million) were given to customers as a ‘thank you’ for using the bank’s products within the year.”

Customers want cheap, simple, tailored insurance products that are available online and via mobile phones, Tesco says.

But simplicity has it downfalls, as one insuranceNEWS.com.au reader discovered when her daughter tried to pay her monthly life insurance premium at Tesco.

The daughter had £100,000 ($151,000) of cover for a family of five with a £90,000 ($136,000) mortgage and one breadwinner.

A checkout operator was asked if this was adequate, but could not answer because they were not authorised to give advice.

The reader, who is an insurance broker, says an adviser could have arranged more suitable cover in about 10 minutes for only a slightly higher cost.

TAL Direct CEO John Hoyle says loyalty cards developed by Coles and Woolworths will be the key to selling life insurance in Australia.

“Data from the card, such as date of birth and the number of children, will be invaluable for a supermarket moving into this area,” he told insuranceNEWS.com.au.

“I think Coles is better placed with its Flybuys card to use this data to target shoppers.”