Virgin Money rehabilitation continues

Two months after signing a multi-product deal with Citibank, Virgin Money has launched a car insurance product in a deal with the Brisbane insurer Auto & General.

Virgin hopes to tempt motorists with an offer to cap premiums for the first two years, working on the premise that consumers are sensitive to the current cycle of rising rates.

Virgin is also offering 13 months of coverage for the price of 12 months when customers sign up online.

The car insurance market is dominated by IAG and Promina but Virgin Money managing director, Matt Baxby, said he was confident of winning share.

Baxby said: "There is a lot of inertia in this market but we know that 1.2 million motorists change their insurance provider each year.

"When they check our prices they will see we are offering a good deal."

Auto & General is best known to consumers through its Budget Direct brand.

In June, Virgin Money formed a partnership with Citibank to develop a new credit card to carry the Virgin brand. The launch is planned for early 2010. The partners will follow that up with a suite of retail financial services products.

Baxby said the alliance with Citibank would go much further than the group's previous partnerships with Westpac and Macquarie Bank.