Lloyds TSB Insurance has been accused of conducting an "information gathering exercise" rather than a genuine tender process when it put its £300m private motor book to the market.
Senior market figures have slammed the company for costing them "tens of thousands of pounds" in tender preparation work only to announce it would be running its own claims and policy administration. The winning tender for underwriting the business has not been announced.
A market source said: "It was the largest tender document I have ever seen. They kept coming back to us and asking for more information.
"They had tons of details and then they said they were going to do the claims and administration themselves. Now they have everyone's business models."
The source added: "Why did they want to know how many policyholders we sell personal accident policies to? How our premium finance deals work? How much travel and breakdown cover we sell? What the buying and selling prices on these kinds of products are? And what our average call times are?
"You think they are trying to make a very informed selection when in fact they were just on a big information gathering exercise."
Another market source warned that the problem could lead to companies becoming unwilling to enter tender processes.
He said: "If it is not a fair and open market opportunity for the parties bidding you are bound to see more people refusing to participate in the process."
A spokeswoman for Lloyds TSB said: "We have very rigorous processes and it is important that we choose the correct supplier to get the best for our customers."
Churchill currently under-writes the business, as well as handles claims and policy administration, but it is thought that Lloyds TSB will not be looking at rival banks to underwrite the business.
