The telecoms company is to launch O2 Insurance in partnership with underwriter Mondial Assistance.
It will offer single-trip and annual cover as well as a pay-monthly product, ‘Flow', which offers consumers the opportunity to increase and decrease the level of cover on a trip-by-trip basis.
Ronan Dunne, O2's UK chief executive, plans to develop the company into a more general, brand-led service business - a change that would emulate Tesco's growth into sectors such as banking and film production.
O2 has already tied up with RBS-owned NatWest to launch its O2 Money financial-services brand. It has rolled out two pre-paid Visa cards, Load & Go and Cash Manager, which are available only to O2 customers.
It plans to offer further banking products, once it has established itself as a ‘credible' player in the sector.
An O2 spokeswoman confirmed the mobile operator will offer a travel insurance product but refused to comment on further brand extensions.
O2's rivals are also looking to diversify their brands into other markets. Vodafone and Orange have both created divisions focused on healthcare, where mobile technology can be used to assist medical staff and patients.
Earlier this month, Orange teamed up with Barclaycard to launch a contactless credit card product. The two are collaborating on the development of a mobile phone that uses contactless technology enabling it to be swiped like a card.
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