AA/Saga merger threatens 2,000 jobs

?The £6bn merger of over-50s insurer Saga and the AA will lead to more than 2,000 job losses, the GMB union has warned.

The warnings came amid fierce speculation about how the merger, which completed this week, would affect insurers’ trading relationships with the two companies.

GMB national officer Paul Maloney said he expected significant redundancies to be announced by Christmas and the current insurance panels to be sent into a tailspin.

He said: “There will be upwards of 2,000 job losses initially. The AA has call centres in Newcastle, Cheadle, Cardiff, Birmingham and Manchester. Saga has a call centre in Kent and they are geared up with the latest technology. They aren’t going to have duplicate operations in different parts of the country.”

Many of the job losses were likely to be felt by the AA’s part-time employees not protected under company contractual obligations, he said.

The AA and Saga will have a combined workforce of 11,000.

The GMB warnings came as the union geared up for a fight with Andrew Goodsell, the boss of the merged company, over the decision not to recognise it as the official union.

Goodsell instead favours an in-house association called the AADU.

However, the GMB has retained 1,800 members and has planned protests against the management today.

Meanwhile uncertainty continued to surround the impact of the deal on insurers.

There are fears that it could see the AA’s insurer panel cut back or disbanded in a realignment of the two insurance giants’ supply models.

Some in the industry have speculated Norwich Union could have the most to lose if the panels are merged given its current position as Saga’s exclusive household insurance provider.

Jack Brownhill, director of the World Motor Insurance Consultancy, said: “Saga’s accounts are up for review. Why would [the household account] be any different? There is a common feeling for a broad base as opposed to a single insurer relationship.”

Analyst Andrew Brikett of Datamonitor said the merged unit could also bring the underwriting of motor policies, sold via AA, in-house.

He said: “This would mean the merged unit would benefit from the additional underwriting profit which is at present flowing to the underwriters on the AA’s panel.”

The AA directed questions on the deal should be directed to Saga, which said it could not rule anything out at this stage.