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Norwich Union job cuts planned

14/09/2006

The UK's biggest insurer, Aviva, has announced plans to cut 4,000 jobs within its Norwich Union business in order to "reduce duplication and improve efficiency".

In a statement the company said that it hoped the cuts would deliver annual cost savings of £250 million in 2008, at a cost of £250 million by the end of next year.

Under the plans, Aviva's 36,000-strong UK workforce will be reduced by 4,000 by 2008, with up to 1,000 roles being moved to India and a further 500 jobs being outsourced to third-party IT suppliers.

The company said that it would "seek to minimise the number of compulsory redundancies through natural staff turnover and voluntary measures".

Aviva said that the job cuts would strengthen the insurer's ability to meet its current financial objectives and achieve growth for its shareholders.

Savings will arise as a result of cost efficiencies and moves to reduce duplication in the company's marketing, human resources, finance, and information technology operations, Aviva said, while plans to adopt a single approach to procurement and supplier management are also set to result in reduced costs.

Announcing the job cuts, Norwich Union executive chairman Patrick Snowball said that the changes were needed to ensure that the company could effectively respond to "shifting dynamics" within the insurance industry, including the increased use of new technology by consumers to purchase financial products.

The company claims that around half of its new direct motor insurance policies are now purchased over the internet.

"We have to ensure that Norwich Union remains a highly efficient and effective company in what is an increasingly competitive and dynamic environment," said Mr Snowball.

"The integration and efficiency measures we are announcing today are part of a programme which will result in an increase in customer focus across our UK businesses along with better and more efficient use of technology," he added.

However, unions have criticised the planned job cuts, expressing "extreme anger" at the announced redundancies.

Amicus spokesman David Fleming said that the workers' union had "a zero tolerance of off-shoring jobs leading to compulsory redundancies", according to comments reported by the BBC.

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