The Cooperative Insurance Society (CIS) is to cut 2,000 jobs over the next two years.
The company said 2,500 jobs would be lost due to restructuring designed to modernise the business.
At the same time 500 new customer service positions are to be created.
The changes will affect the company's general and life insurance operations.
The Society said it was responding to substantial changes in the market to ensure its future profitability.
The cuts will be mainly in the back office and support areas of the business, said CFS head of communications Russ Brady.
He said a consultation period lasting between 18 months to 2 years would determine the final number of cuts and new positions created at CIS.
The cuts come as the as part of a strategic review of the CIS business, said the Co-op. The review will look at cutting CIS' cost base, and improving customer service.
Brady said: “We do not and will not outsource our client facing services. But the idea of outsourcing our back office operations will be looked at as an option during the review process.”
He said the announcement of the review was a statement of intent of the changes that will take place within the next two years. The final number of job cuts, and the potential savings to CIS will only become clear when more details are finalised, he added.
Co-operative Financial Services chief executive Mervyn Pedelty, said: “CIS is not immune from the intensifying economic and competitive pressures occurring within its core markets and we need to take action now to ensure a vibrant, successful and sustainable future for our business.
CIS currently employs approximately 9,000 staff throughout the UK, including 3,000 financial advisers. It has total annual premium and trust income of £1.97bn.
