Initial reports on the merger suggested that both companies would still run separately. This may have been misleading. It now emerges that at least 2000 jobs are at risk and that the insurance operations of the two will be partly or fully merged.
The £6bn merger of over-50s insurer Saga and the AA will lead to more than 2,000 job losses, the GMB union has warned.
The warnings came amid fierce speculation about how the merger, which completed this week, would affect insurers’ trading relationships with the two companies.
GMB national officer Paul Maloney said he expected significant redundancies to be announced by Christmas and the current insurance panels to be sent into a tailspin. He says: “There will be upwards of 2,000 job losses initially. The AA has call centres in Newcastle, Cheadle, Cardiff, Birmingham and Manchester. Saga has a call centre in Kent and they are geared up with the latest technology. They aren’t going to have duplicate operations in different parts of the country.”
Many of the job losses were likely to be felt by the AA’s part-time employees not protected under company contractual obligations, he said. The AA and Saga will have a combined workforce of 11,000. The GMB warnings came as the union geared up for a fight with Andrew Goodsell, the boss of the merged company, over the decision not to recognise it as the official union. Goodsell instead favours a toothless in-house association called the AADU. However, the GMB has retained 1,800 members and has planned protests against the management including a very unusual protest outside the home of Andrew Goodsell.
Meanwhile uncertainty continued to surround the impact of the deal on insurers. Industry gossip suggests that not only will the number of insurers be reduced so AA and Saga are not competing with each other, but the change of ownership offers the company the opportunity if it wants to, to get out of existing deals and renegotiate with insurers with a stronger hand and larger customer base. Both companies offer travel, but only Saga offers private medical, health cash and personal accident. Some policies could even be brought in-house into a captive so that the group would retain underwriting profit rather than pass it to insurers.
Private medical insurance: News update: 20 Sep 07