CGU is embarking on a program to close nearly all its regional offices across the eastern states, but plans to keep enough open to deal with the group’s high-profile rural and regional business.

Offices in Wangaratta and Albury have already closed, with calls being redirected to a call centre. CGU says closures since March total around 20 and more are soon to follow.

Spokesman David Grabau told insuranceNEWS.com.au CGU will continue to have an office in every state and territory capital, with offices in major regional centres where CGU has workers’ compensation business.

“We remain committed to maintaining our leading position as Australia’s largest regional and rural insurer, and we will continue to have business development managers based in regional areas across Australia,” he said.

Industry sources say about 200 regional jobs will go for a labour cost saving of about 10%.

CEO Peter Harmer announced in March that the company was embarking on a three-year $75 million restructure, under which 600 positions would be shed, some by natural attrition.

The new operating model is expected to save CGU $25 million in the 2013 financial year, rising to an annual pre-tax benefit of $65 million by the end of 2015.

Mr Grabau says CGU’s new operating model will make it easier for brokers and partners to do business with it.

“They have told us they find our organisation difficult to navigate and that we’re less efficient than a number of our competitors,” he told insuranceNEWS.com.au.

“So we’re adopting an integrated, function-based approach with common approaches to account management, underwriting and claims that will remove areas of duplication.”

CGU maintained offices in many regional centres including Warrnambool, Shepparton, Wagga Wagga, Tamworth, Toowoomba and Townsville as its competitors withdrew to the cities and in many cases reduced services to the bush.

An industry source told insuranceNEWS.com.au that several CGU regional offices are already in wind-down mode, with regional managers being given six-month contracts to shift the business to the new model.

It is believed CGU will maintain some regional staff, who will work from home offices.

Mr Grabau says it “makes more sense to have mobile account management teams out in the field… than people staffing a traditional ‘bricks and mortar’ office”.

CGU says the restructure has nothing to do with the decision last year to lift its stake in authorised representative (AR) specialist brokerage NAS from 25% in 2008 to 100%.

It is understood the insurer plans to move many of its 417 authorised representatives – the largest number connected to any insurance group in Australia – into NAS.

CGU’s AR profile is relatively mature, with many smaller agencies being bound primarily or exclusively to CGU. However, restrictions on the business they can engage in have been eased in recent times.

Older ARs with smaller agencies are expected to move towards retirement.