Norwich Union to slash up to 1,800 jobs by 2010

Aviva-owned Norwich Union could cut up to 1,800, or 10 per cent, of its staff by the end of 2010 as part of plans to revamp its operating model.

The announcement, which is part of plans first announced in October, will see a restructuring of the company’s operations function, a simplification of processes, and improvement of customer services.

It is the second time in three years Aviva has announced a massive reduction in headcount, and comes just a day after rival Zurich announced cost cutting measures that could see up to 900 UK staff lose their jobs.

In 2006, Aviva said it would be cutting 4,000 jobs by the end of 2007, with half coming from compulsory redundancies and the remained from staff turnover, redeployment, and voluntary redundancies.

Norwich Union axed 200 IT staff in October, and 30 directors the following month. The company employs around 18,000 personnel in the UK.

In February, following a £475m hit from the summer floods, the insurer posted a 2007 combined operating ratio of 106 per cent - the highest among the major insurers.

Commenting on the latest developments Igal Mayer, chief executive of Norwich Union, said: "We are a very strong business that has grown over the years into a complex organisation. We want to deliver excellent, consistent and reliable customer service with market leading efficiency. To achieve this we will need to fundamentally simplify our business, consolidating our expertise into seven insurance centres of the future in the UK.

“We need to fundamentally simplify our business, consolidating our expertise into seven insurance centres of the future in the UK.

Igal Mayer, chief executive, Norwich Union

"This is a transformation that will take place over the next two years and will provide our employees with the products, processes and technology to give our customers and business partners excellent service, right the first time, every time."

Norwich Union Insurance currently has offices in 52 towns and cities in the UK, 22 of which will be affected by these changes. In some cases specific buildings will close, with staff moving into smaller accommodation in the same towns and cities.

The company said that after a number of mergers and acquisitions, its operations function has become complex, with too many products, processes, systems and locations. It said this makes it difficult to provide service excellence to customers and business partners and to optimise economies of scale.

The seven new centres of excellence will be based in Norwich, Perth, Bishopbriggs, Stretford, Manchester, Leicester and Southend.

Its operations function will be withdrawing from Dundee, Glasgow City Centre, Leeds, Sheffield, Liverpool, Cheadle, Birmingham, Bristol, Southampton, Basildon, Ipswich, Exeter and Worthing. This will happen a two-year period, the insurer said.

The company will continue to maintain its broker trading presence across 40 UK sites.