In a statement, the group said the UK insurance market has become steadily more challenging and the drivers for this – including low investment returns and increasing loss trends – have accelerated in recent months.
Nine month results last week highlighted the need for operational change, following the deterioration in the trading performance of Zurich’s general insurance business, something which scuppered the group’s anticipated £5.6bn takeover of RSA Insurance Group in September.
Today the business has begun consulting its employees on the potential job losses.
The statement explained there are two main drivers for the changes.
“Firstly, the organisation needs to become a less expensive operation in order to remain competitive, and aims to reduce costs by at least £40m over the next two years in the UK. Also, feedback from customers and brokers suggests a more straightforward business model is necessary.”
This is part of a global group-wide programme which aims to deliver annual run-rate cost savings of $300m (£198m) by the end of 2016, and of more than $1bn (£662m) by the end of 2018.
One area where job cuts may fall the hardest is in the commercial broker division, with proposals to introduce a simpler structure resulting in much faster decision times when it comes to writing new business.
The plans put more underwriting decisions and transactions into the branches, where it is expected that most decisions will be made. The consultation on job cuts will continue until the end of March next year.
In addition, the global corporate insurance business in the UK announced proposals last month to cut around 35 roles from the business. These plans also aim to reduce cost and simplify the structure of the organisation.