The U.K.’s Aviva plc announced that its British business Norwich Union has targeted some 4000 jobs for elimination in an initiative to “reduce duplication and improve efficiency to deliver annual cost savings of £250 million [$470 million] in 2008 at a cost of £250 million by the end of 2007.”
Aviva said the “savings and costs will be evenly spread between the life and general Insurance businesses and in the life business, our expectation is that it will principally benefit shareholders. These initiatives will further strengthen the group’s ability to meet its current financial objectives and deliver growth for shareholders. The savings are in addition to the planned RAC integration savings of £130 million [$244.4 million] per annum by 2008.”
The number of U.K. employees is presently around 36,000. Norwich plans to reduce that number by approximately 4000 by 2008, “with up to 1,000 roles being offshored to India (in line with previous announcements that 7,800 roles will be located offshore by the end of 2007) and a further 500 roles being outsourced to third party IT suppliers.”
Aviva did say Norwich “will seek to minimize the number of compulsory redundancies through natural staff turnover and voluntary measures. The savings primarily arise from cost efficiencies and reducing duplication in marketing, human resources, finance, and information technology, as well as applying a single approach to procurement and supplier management.”
The announcement follows a review of the Norwich Union insurance businesses and is in response to “a combination of changing distribution dynamics in the insurance industry and changes in the use of technology,” the announcement continued. “An update on Norwich Union’s UK life strategy will be presented on 26 October to analysts and investors.”
Norwich Union executive chairman Patrick Snowball commented: “We have to ensure that Norwich Union remains a highly efficient and effective company in what is an increasingly competitive and dynamic environment. Customers’ buying habits are changing rapidly as technology becomes more accessible. Already half our new direct motor insurance policies are purchased over the Internet. Consumers, IFAs and brokers are increasingly operating in a self-service world.
“Norwich Union, with its strong and trusted UK market brand will continue to lead the industry by adapting to these shifting dynamics. We will do this by leveraging the scale of our life and general insurance businesses and we have a proven record of delivering change.
“The integration and efficiency measures we are announcing today are part of a program which will result in an increase in customer focus across our UK businesses along with better and more efficient use of technology.”
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