Insurance firm chief answers criticisms from staff

11:00am Thursday 31st July 2008

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IN the immediate aftermath of the Norwich Union Life announcement, the company’s chief executive Mark Hodges spoke of his “empathy” with staff affected by the loss of 500 roles at its Monks Cross offices.

In an interview with The Press he also countered claims that handing over administration for its collective investments to Financial Data Services (IFDS) of Basildon was a back door method of outsourcing to India.

A Norwich Union worker anonymously contacted The Press to say he believed that some of the work was ostensibly going to Basildon, but in fact would be carried out by IFDS at offices in India, although customers would believe that it was all done in England.

He said he believed that IFDS’s office in India was next door to a Norwich Union building.

But Mr Hodges, whose media relations officer, David Ross, described the allegations as possible “mischief making and speculation”, said that he believed that IFDS may have had an office in Mumbai, but there were no Norwich Union call centres there.

“There is no offshoring angle in this story. It was purely a decision to hand to experts in the UK who could handle it more effectively and efficiently.

“If this was about cost and not expertise, we could have outsourced to our own resources in India if we thought that it was a better option, but we are simply buying into IFDS expertise.”

Mr Hodges also denied the allegations of some Norwich Union Life staff that they had been “lied to” by management. When The Press asked the firm on June 16 if was true that hundreds of jobs were to be outsourced, the company stated no decisions had yet been taken.

He said: “The first people who we wanted to hear the decision which had been made were the staff and we spoke to them yesterday.

“We had been considering a range of options and anyone who had a reasonable grasp of that conversation (with The Press) would know that nothing had been signed at that point.”

He said he understood and empathised with the staff reaction to the announcement, “but the harsh reality is that we can use a third party provider more efficiently”.

He added: “The message is that we have a great track record of redeploying people into other parts of the business. We will be working on a smooth transition which will take between a year and 18 months and we will talk to all individuals affected with a view to seeing what other opportunities there are within York and Norwich Union.

“If you look back over the last few years we have made a number of jobs announcements, but the numbers who have actually been made redundant are very small.

“In York we have a staff turnover of between ten and 12 per cent out of a workforce of more than 3,500 and in any given year we are creating opportunities.

“It is very unstabilising for staff. I empathise with them and we will work with them to resolve their individual circumstances. The nature of our business has changed. It is all the time moving towards a more online business.

“Where other people can supply expertise we should work with them. The confluence of these puts pressure on the number of jobs in the system.

“We have to look after our people as well as we can, but we have to do the right thing, otherwise the company will be uncompetitive and that is a position that nobody wants.”

But what remains unclear is the fate of the Norwich Union building in Monks Cross, which after the job cuts would have just 250 people working there rather than 750.

Was he planning to empty the building by redeploying those left into other Norwich Union Life offices? Or would he transfer staff from other offices into it?

“It is too early to say. It would take a year to 18 months so we would need the premises during that period. We are always looking to make optimal use of our premises. We will be considering this and discussing this internally and we will then make the decision public.”

Either way, the public deserved an assurance of Norwich Union Life’s commitment to York.

He said: “Despite today’s announcement, we have more than 3,000 roles in York, the HQ is in York. We are investing in training of our people in York and a successful Norwich Union Life is good for York.”

Finally, he expressed his gratitude “to all the people who work for the company in York and Yorkshire and the massively hard work they put into the business to make it a success.”

York-based life and pension sales profits increase by 11%

JOB losses at Norwich Union Life in York come at the same time that parent company Aviva today announced “real progress in the last six months” in the face of economic headwinds.

That is the description of Aviva’s interim results by Andrew Moss, its chief executive as operating profits rose seven per cent to £1.233 billion.

Heftily contributing towards those profits were life and pension sales at York, which soared 11 per cent to £17.283 billion at an increased profit margin.

But without specifically mentioning the 500 Norwich Union Life roles that will be lost at Monks Cross, Huntington, Mr Moss described the way in which the IT systems affecting “lifetime wraps” – that is the system by which high net worth customers “wrap” all their investments into one place – will be moved to the Scottish Friendly group.

It means that the back office administration previously at Monks Cross will now be run by Scottish Friendly.

Mr Moss said: “Transforming our business means simplifying our systems and reducing costs to give customers even better service.

“Our cost reduction programme is already contributing to profit and we are on track to deliver £100 million of savings by the end of 2009.”

Aviva shareholders were also able to celebrate a dividend up ten per cent to 13.09 pence, with a net asset value per share of 702 pence.