[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Thursday, 14 September 2006, 10:09 GMT 11:09 UK
Norwich Union cuts 4,000 UK jobs
Norwich Union office
Aviva, owner of Norwich Union, has long-term off-shoring plans
The UK's biggest insurer, Aviva, has unveiled plans to cut 4,000 jobs at its Norwich Union business by 2008 as it seeks to cut costs.

Aviva said that about half of the job reductions would come through compulsory redundancies.

It added that that up to 1,000 jobs would be shifted to India, and another 500 IT posts would be outsourced.

Workers' union Amicus called the move disappointing and said its view on the cuts was one of "extreme anger".

Norwich Union employs about 36,000 people in the UK and the restructuring plans will trim about 11% of its total staff.

Tough choices

Aviva is not alone in having to revamp its operations as consumers change the way they buy insurance, with many turning away from High Street shops and doing their shopping online.

Norwich 850
York 450
Glasgow 250
Sheffield 250
Cambridge 200
Perth 200
Newcastle 200
Eastleigh 200
Stevenage 150
Bristol 150
Worthing 100
Belfast 100
Birmingham 50
Source: Norwich Union

In June, Royal & Sun Alliance announced plans to cut 1,550 jobs by 2008 and analysts are predicting further consolidation in the insurance market.

Aviva failed in its attempt to buy UK rival Prudential earlier this year and the latest job cuts are seen by many experts as an attempt by the firm's management to ensure that it is not snapped up by a larger European rival.

"We only have three costs - people, technology and buildings," said Patrick Snowball, Norwich Union's executive chairman. "As you use more technology, you need fewer people and buildings."

David Fleming, from Amicus, told the BBC that it had "a zero tolerance of off-shoring jobs leading to compulsory redundancies".

Aviva and unions will now start a consultation period, with Amicus saying it would "consult with our members to see what they want to do".

Trimming down

Aviva said the offshoring was part of previously announced plans to move 7,800 jobs overseas by the end of next year.

Consumers, independent financial advisers and brokers are increasingly operating in a self-service world
Patrick Snowball, Norwich Union executive chairman

The company said it would look to "minimise the number of compulsory redundancies", but added that it needed to make difficult decisions if it wanted to safeguard future profitability and its industry position.

Aviva said that while it would be shutting some offices in cities such as Belfast, Glasgow, Newcastle, Norwich and Cambridge, it would not completely shut down operations in those locations.

Staff affected by the latest job cuts will be offered retraining and the chance to move within the company.

Much of the criticism directed at Aviva comes after the company announced that half-year profits jumped by 27% to 1.7bn, helped by foreign expansion and strong growth in the UK pensions market.

Sales drive

Norwich Union's Mr Snowball said changes in consumer habits meant the company was facing more and more competition.

Norwich Union's Horizon Business Centre
Norwich Union wants to maximise it use of office space

"Consumers, independent financial advisers and brokers are increasingly operating in a self-service world.

"Customer's buying habits are changing rapidly as technology becomes more accessible, demonstrated by the fact that 50% of our new direct motor insurance policies are now bought online."

Aviva said the job cuts would save it 250m in 2008 and added that it was also planning to shut down 107 BSM driving school offices by 2007 as more people book their lessons online.

How the insurer has been under pressure

Norwich Union boss backs job cuts
14 Sep 06 |  Business
Aviva profits up on world demand
09 Aug 06 |  Business
Jobs go at Royal & Sun Alliance
19 Jun 06 |  Business
Aviva buys US insurer for 1.6bn
13 Jul 06 |  Business
International sales boost Aviva
27 Apr 06 |  Business
Aviva scraps bid for Prudential
24 Mar 06 |  Business
Aviva rules out hostile Pru offer
20 Mar 06 |  Business

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Americas Africa Europe Middle East South Asia Asia Pacific