The partnership will give Tesco responsibility for retail pricing, sales and marketing, customer service and new product development providing greater control of the insurance products sold under the Tesco brand.
The partners will invest £100m in forming a new business called Tesco Insurance, which will be owned 49.9% by Tesco and 50.1% by Fortis.
Tesco said it would introduce better financial products and keener prices on car, van and household insurance.
More than 1,500 new jobs will also be created in the UK as a result of the deal.
The deal will add another 1.5 million motor and household customers to Fortis UK's existing customer base of around 7 million people.
Tesco Personal Finance is the UK's largest supermarket bank, launched in 1997.
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