Intermediated insurer CGU has begun speaking with staff over plans to cut 600 roles over the next three years under a $75 million realignment of its business.

CGU will shave staff numbers by 16% between now and 2015, with 450 roles to be removed by the end of the 2013 financial year.

CEO Peter Harmer says while the number of roles within the company will fall from 3700 to 3100, the actual number of job losses will be less as employees are moved within the business.

Downsizing is expected to take place across all parts of CGU’s business. The bulk of the company’s 3700-strong workforce is based in Melbourne.

Mr Harmer says while most roles would be lost through natural attrition, CGU has budgeted for some redundancy payments. The company currently experiences staff turnover of around 500 people a year.

Mr Harmer told insuranceNEWS.com.au further information on which sections of the business will be most affected will be released in the coming weeks once staff have been informed of the changes.

“I’ve been impressed with the level of support from our staff,” he said. “We’ve had some honest and open discussions about what these changes will mean for individuals.”

The shakeup of CGU’s business model is the third such drive to remove duplication and streamline efficiencies in the past decade. Under the plan unveiled by IAG CEO Mike Wilkins and Mr Harmer, CGU will centralise its account management, underwriting, claims, operations and support teams based on feedback from brokers citing the “difficulty in doing business with CGU”.

“In our old model, we were set up around customer segments or product types, and it meant that individual brokers who had large portfolios had to access different parts of CGU, parts they may not have known or had a relationship with,” Mr Harmer told insuranceNEWS.com.au.

“They said they found it very hard to do business with us.

“This model simplifies our structure, making it easier for brokers and agents to deal with us and access the immense knowledge and expertise that sits within our organisation.”

Mr Harmer says CGU is three years into a five-year turnaround plan, and will become an “integrated, function-based” organisation.

The new business model, known as One CGU, will go live on March 30 before the launch in September of the Guidewire-based ClaimsCentre claims management system, which replaces eight separate claims platforms.

“We want to think, act and behave as one integrated organisation,” Mr Harmer said.

CGU is expected to generate initial cost savings of $35 million in the 2013 financial year, increasing to a pre-tax benefit of $65 million by the end of 2015.

Mr Harmer told insuranceNEWS.com.au he expects further gains in gross written premium (GWP) and insurance profit as a result of the changes.

“We do expect some uplift in being able to simplify our business and sell profitable lines,” he said. “We wouldn’t be doing what we are doing if there wasn’t going to be some sort of upswing.”

In the first half of the current financial year CGU banked an underwriting loss of $103 million on gross written premium of $1.33 billion.

Mr Harmer says the recent losses had no bearing on CGU’s altered business model.