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Categorized | Insurance

Direct Line and Aviva plan more job cuts

Posted on November 29, 2012

Two of Britain’s biggest insurance companies have announced plans to cut hundreds more jobs, the latest sign of the consequences of the sector’s efforts to become more efficient.

Direct Line, the home and motor insurer that floated on the stock market in October, said 236 positions were at risk on top of the almost 1,000 planned job losses it had already disclosed in recent months.

    Less than two hours after Direct Line’s announcement, one of its biggest rivals, Aviva – which had previously warned it planned to cut about 800 jobs in the UK – said it was considering letting another 120 employees go.

    Both companies are seeking to make their operations more efficient in the face of limited growth prospects across the UK general insurance sector.

    Aviva is targeting £400m worth of cost cuts across its global operations, most of which are “job-related”, while UK-focused Direct Line is aiming to reduce its cost base by £100m.

    All of the latest cuts at Aviva would come from its property claims management operation in Sheffield, known as Asprea, which the FTSE 100 group planned to integrate with similar centres in Perth and Southend by the end of next year.

    Union leaders have previously described the insurer’s cuts as “unacceptable”.

    Caroline Cooper, director of property claims, said Aviva hoped to “create a simpler service for our household and commercial customers with fewer people involved in the handling of their property claim. But we appreciate this is also a difficult time for our employees.”

    The latest prospective cuts at Direct Line, majority owned by Royal Bank of Scotland, will come from the group’s commercial, risk and compliance operations as well as its so-called chief customer office.

    The insurer has already set out plans to make savings in marketing, IT and various other back-office functions and close a site in Teesside that employs 500 people.

    “These proposals are another important step on our journey to deliver on our cost-saving target,” said Paul Geddes, chief executive at Direct Line. “They are essential to ensure we are as efficient and competitive as possible.”

    Direct Line added it hoped to create “a simpler, more efficient business” that would “lead to the creation of a number of new roles”.

    Both Aviva and Direct Line said they were seeking to support those employees affected by the cuts and hoped to offer some of them jobs elsewhere in their organisations.