Seventh heaven for the man who started Britain's telephone insurance revolution

As nice as Reigate is on a sunny summer's day, the Surrey commuter town doesn't look like a playground for multimillionaires.

As nice as Reigate is on a sunny summer's day, the Surrey commuter town doesn't look like a playground for multimillionaires.

But Peter Wood, the man that has made upwards of £80m from being first to start selling insurance over the phone, is a Home Counties boy-done-good and likes his roots.

The founder of Direct Line looks pleased with himself as he looks out from his office over the lush local countryside. He is about to launch his seventh insurance business, so he should know what he is doing by now.

The new company is called Spectrum and is a "simple start-up" for Mr Wood as he can build on the infrastructure he has developed at esure, the online insurance joint-venture he began with the HBOS banking group in 2000. The new company, another joint venture with HBOS, is aimed at drivers of fast cars, and companies with small commercial fleets that find it difficult to get cover. "But I'm not going to insure youngsters. I don't let my daughters drive my cars," he says. Also off the list are actors and rock stars.

Mr Wood has five daughters and his own sports car is insured with Direct Line. "But now I can move it to my new company," he says, with some degree of satisfaction. It will also be useful when his £250,000 Mercedes Maybach limousine is delivered - though it will be Mr Wood's driver, not the man himself who will have the pleasure of being behind the wheel.

The smart cream suit he is wearing shows an eye for a good tailor that will instantly tell you Mr Wood is not your usual Mr Insurance. In fact, he would rather be known as Mr Wizard, his code name when his deal with HBOS was first being arranged.

His training was in computers and he was working for the insurance broker Alexander Howden when he came up with the idea for Direct Line and its little red telephone on wheels. "I ran their entire back office computer system, so I got all the agony and none of the glory. I knew I could do it better myself."

Cynicism from rival insurers only served to spur him on. "They all said I might get the business in on price, but that I'd lose it in service. But look at their service records. They are appalling. And then they said I wouldn't have enough reserves."

Royal Bank of Scotland backed his idea for Direct Line and put him on a performance-related salary. As the business took off, this escalated rapidly. It climbed to £6m a year, and then to £11m, but it was when he reached an £18m pay packet that the Labour MP Robin Cook called it "obscene". RBS ended up having to buy him out of his management contract in 1994, for £24m. Fuss about corporate pay, however, he thinks, is "all bullshit".

"Nobody should be ashamed of success," he says. "I played golf with the RBS chairman Sir George Mathewson recently, who was joking about where his statue for his services to the bank would be in St Andrew Square in Edinburgh. I told him his statue would have to be a lot smaller than mine. I created a multimillion-pound business for them and I left a wonderful legacy behind me. I gave George a blue phone at my leaving do, as a joke to see if they would dare try to change the brand." He made another £10m in 1998 from selling his stake in Privilege Insurance, which he set up with RBS after Direct Line.

And now he seems to be working the same magic at esure. Since launch, the online insurer for safe drivers has racked up 600,000 customers in little more than two years. Michael Winner, the restaurant critic who stars in the company's advertisements and sings "I love esure, I love esure, I love esure", has proved a big hit. He is an old friend of Mr Wood, after clashing a few years ago through being insured with Privilege. "He had a complaint and threatened to make me 'Prat of the Week' in News of the World," Mr Wood says, "so I threatened to withdraw his cover. He asked me out to lunch and we've been friends ever since."

At 56, he is still very much a hands-on executive at Esure. "I'm paid to think and to create, I'm not paid to 'do'," he says. "I'm not talking to people about staff car parks or canteens or salaries. Other people can sort all that out."

Car insurance can only be so much fun, surely, and with six companies already in the bag, why is he still doing it at all?

"Why not?" Mr Wood answers. "You can't play tennis and golf every day. I love creating businesses. Buying and merging is such a negative thing to do. Take the recent Direct Line and Churchill merger - they will have to combine head offices and make people redundant. The bars in Bromley, Churchill's Surrey base, will be full of miserable people right now. But the bars in Reigate, Glasgow and Manchester, esure's centres, are full of people celebrating."

Many of his current employees have followed him from Direct Line, which shows an impressive degree of loyalty. His driver has been with him for 14 years. He recently held a conference for esure staff at his house in southern Spain. He goes to every staff Christmas party, in esure's Glasgow and Manchester sites as well as Reigate, to "have a laugh and a drink".

This he enjoys. Indeed after eating in his local restaurant, Tony Tobin@The Dining Room, in Reigate, he bought it. Mr Winner gave it a very nice review.

"Tony was great with a frying pan, but didn't know about anything else. So I taught him a thing or two and now we sit down with spreadsheets once a month. We've doubled the size of the restaurant and its returns," Mr Wood says.

Another major investment is Mr Wood's 10 per cent shareholding in Hornby, the model railway maker. With five daughters and one granddaughter, he forgives himself a little traditional boyish indulgence - although he would rather have one of their new huge Scalextric sets to play with rather than the traditional model steam engine.

"I saw the business had huge amounts of cash and I bought in when the shares were 150p," he says, smiling. They are now nearly 800p, and he is now sitting on a holding worth about £5m.

"All businesses are the same," he says. "You have customers, products and costs and you have to try to make a profit out of it. It's not rocket science, is it?"

His deal with HBOS gives him control of esure and the new business for 10 years. HBOS has, however, the option to float or buy the rest of the business in four years, which he fully expects it to do. Then Mr Wood, who will be 60, wants to spend more time investing in businesses through a private-equity fund. "I'd travel the world looking at the businesses I've got stakes in, and I think, as a shareholder, I could be a good sounding board for chief executives," he says.

He already spends a lot of time travelling, as his third and fourth insurance companies were in the US and he is still involved with them. As well as Reigate and Spain, he has a house in Boston, Massachusetts, which he visits about once a month. "The changing seasons there are beautiful," Mr Wood says. "Life is about contrast. I couldn't spend all my time in the sunshine."

His father had wanted him to be a doctor, but when the family ran into financial difficulties, five years of training suddenly seemed a little expensive. "So I went and got a job. Thank God I did - imagine how miserable I'd be now if I was a GP," he smiled.

PETER WOOD - FULLY INSURED

Position: Executive chairman, esure

Age: 56

Pay: Undisclosed director's salary from HBOS group, accumulates a shareholding in Esure that is realisable when HBOS buys or floats the business

Education: "I did my A-levels and then got a job."

Career: Founded Direct Line in 1985 with Royal Bank of Scotland after working for the insurer Alexander Howden. Set up Privilege Insurance with RBS in 1996, then in 1998 launched Homeowners Insurance and Direct Response Corporation in the US. Set up esure with HBOS in 2000.

Interests: Red wine, good food, golf, tennis, Chelsea Football Club, spending time in Spain and Boston in the US