Move will see up to 130 jobs axed as regional centres close

French-owned Groupama is set to focus its commercial lines business entirely on the SME market and will place all remaining commercial business, bar fleet, in run-off.

The move means regional centres in the City of London, Leeds, Birmingham, Croydon and Manchester will close. However, Croydon will remain open for the next 12-18 months to handle the run-off business and Manchester will reopen as the commercial lines centre.

Branches will also close in Newcastle, Glasgow, Bristol, Southampton and Barnet. However, the claims centre in Barnet will remain open.

The closures will result in 120-130 job losses. The company is entering a formal consultation process with its staff over redundancies.

The announcement follows fellow French-owned insurer AXA's decision last week to cut 700 jobs and close five UK centres in a bid to cut costs by 20% and reinvest £100m into IT and e-commerce.

Groupama's move would mean a reduction in gross written premium of £60m to £75m in 2002-2003, said Groupama managing director Tim Ablett. This means an end to contingency business, credit and bond insurance, and most of the company's scheme business.

Groupama's SME book brings in a gross written premium of £14m per year. The company defines SME businesses as having a property exposure of under £2.5m and a premium of less than £7,500 per year.

One of Groupama's bright ideas is to recommend alarm systems and the like for clients at the underwriting stage rather than at claims and rehabilitation stage, said Ablett. Groupama will strike deals with suppliers to provide the service.

Ablett added that the move would save the company £15m per year over the next four years. And that some of the savings would allow investment in electronic trading. Ablett said trading through the Polaris E-market [son of i2i-link] was an aim, not trading direct to customers. "This will be a broker proposition," said Ablett.

Ablett said the move should be a success because of the company's expertise in high volume, low margin personal lines cover. He said SME business was similar.

The initial reaction of brokers was one of surprise and regret.

One large regional broker said: "Groupama's refusal to write with Aon and Marsh gave us an advantage because we did business with them. It's a shame because we stuck with Groupama through its troubles last year. We will have some difficulty rebroking."