Senior source at NIG said number of staff on 12-week performance management contracts was minimal
Insiders at Royal Bank of Scotland’s insurance arm (RBSI) has moved to quash market speculation that a significant proportion of the senior work force at NIG, its broker only arm, has been placed on 12-week performance management contracts.
The denial came after a number of senior market sources suggested that NIG bosses had put underperforming staff, mostly senior management, on ‘action contracts’, with their positions reviewed each time the 12-week period expired.
NIG refused to make an official comment on the rumours, but a senior source at the RBS-owned insurer said that the number of staff on action contracts was minimal, and no more than would be expected for a large workforce.
A market source claimed: “They have put a number of people on these contracts with a view to them pulling their socks up.”
This latest development follows a number of senior departures at NIG. Most recently, former managing director Michael Rea resigned in June and was replaced by commercial director Andy Cornish, on a temporary basis.
The source said the decision to introduce the performance contracts followed Rea’s departure. “It was a move to put pressure on [staff] to keep business and keep on selling,” the source added.
RBSI posted pre-tax profits of £683m last year, but reported a loss of business in its broker and partnerships divisions which saw the number of its policies decline by 4.5% to 1.37 million and led to RBSI chief executive Chris Sullivan opening the door to a potential sale of the NIG brand.
RBS is currently struggling to find a buyer for its insurance division, which includes brands Direct Line and Churchill.
NIG has been consistently linked with AIG in recent months, though it is understood that RBS would prefer to sell the business as a whole.
RBS shares have lost almost a sixth of their value in the past week. As Insurance Times went to press they were trading at 167p.