Decision blamed on fierce competition in personal lines

Zurich will cut 300 staff and relocate up to 100 at its Eagle Star Direct offices in Bournemouth. The changes will come into effect by 31 March, 2003.

A Zurich spokesman said: "We are now in a consultation period with staff and unions as to who takes redundancy and who would be keen to relocate.

"With the closure of the offices in Bournemouth, there will be a knock-on affect on our call centres in Newcastle and Fareham," he said.

He said the decision had been made because of the "ferociously competitive" personal lines sector, particularly in the motor market.

Zurich holds the freehold of the Eagle Star Direct offices on Richmond Hill, in central Bournemouth.

Zurich has yet to decide whether to sell the building or rent it.

The move is part of Zurich's strategic shift to become an amost entirely broker-based insurer.

In an exclusive interview with Insurance Times, which appears in this week's Top 50 Insurers supplement, Zurich's UK general insurance chief executive Patrick O'Sullivan said that wherever possible customers will be referred to brokers and only if they insist on a direct sale will they be referred to the direct business.

"It's not sustainable long term [Eagle Star Direct brand]. We won't be able to support the advertising that we would want for the direct and broker brands in a market that provides wafer-thin margins.

"Hank Greenberg [AIG chairman], who is someone you have to admire in this business, said his competitive advantage is that he doesn't need to spend money on brand," said O'Sullivan.

A company spokeswoman added that the insurer had decided "the cost of sustaining two brands was not practical."#