Britannic has concluded that it does not make economic sense to continue delivering a proactive sales service through a direct sales force

Harold Cottam, chairman, Britannic

The company has blamed the cuts, which will save �82m a year in costs, on a growth in red tape and the end of the UK's jobs-for-life culture, which has hit takings from middle class families.

The cuts, which will decimate the door-to-door sales force at Britannic Assurance, follow job losses announced by Prudential and Sun Alliance last month.

Roger Lyons, general secretary of the Manufacturing Science and Finance union, branded the news as "a disaster for jobs and a disaster for customer care".

"It signals the end of the personal touch in insurance," he said.

'Inherent challenges'

"The provision of advice-based sales to Britannic Assurance's traditional customer base has always faced inherent challenges," chairman Harold Cottam said.

Roger Lyons: "A disaster for jobs and customers"

"Families on middle-to-lower incomes need significant encouragement and advice to make adequate provision for themselves."

A lack of disposable income, and insecure employment patterns, "make it more difficult for such customers to maintain contributions", he said.

Increasing price transparency in financial services markets is, while offering benefits to customers, hitting businesses which offer plans reliant on small, regular payments.

And enhanced regulations have increased training costs, and made the sales process longer and more complex, Mr Cottam said.

"Britannic has therefore concluded that it does not make economic sense to continue delivering a proactive sales service through a direct sales force."

Core team

The sales team will be reduced to a core to 100 "advisers", with a further 100 staff deployed to selling Britannic's stakeholder pensions packages.

Existing customers will be increasingly served by direct mail and call centre services, Mr Cottam said.

Britannic is to focus on selling packages through other organisations such as independent financial advisers.

The firm has already signed a distribution deal with Spicer Haart which, with 260 branches, claims to be Europe's largest independent estate agency.

End of an era

The shake-up is a further signal that, facing competition from low-cost internet operations, the era of the door-to-door insurance salesperson is coming to a close.

The traditional direct sales force is just too expensive to run

Steve Melcher, Sun Life Financial

The Prudential, noted for its "man from the Pru" tag, last month announced the loss of 2,000 jobs in sales force restructuring.

And the UK insurance division of Sun Life Financial of Canada has closed to new business, and cut its workforce from 2,000 to 300.

"The traditional direct sales force is just too expensive to run," said Steve Melcher, the firm's UK managing director.

Britannic Assurance has prided itself on the quality of its sales team.

"We believe in personal contact - think of your Britannic adviser as a professional and as a friend," the business says on its website.

Sales hit

Britannic admitted the shake-up announced on Wednesday would hit takings at the assurance arm.

Results snapshot - Britannic

Pre-tax profits: �64.4m (-58%) Underlying pre-tax profits: �174m (+7.5%) 1,600 sales jobs cut 400 back office jobs cut 250 posts created Buys remaining 25% share in Britannic Money for �97.5m Earnings for year to Dec 31

"The effect of our decision... is likely to result in a 40% reduction in sales this year for this business," Mr Cottam warned.

But he said it was "probable" that rapid sales growth in the firm's pensions and asset management units would offset losses at Britannic Assurance.

New products launched by the mortgage arm Britannic Money, formerly First Active Financial, should see policy completion numbers this year come in "significantly ahead" of last year's total.

Upheavals

The announcement follows a series of upheavals at Britannic last year, designed to transform the firm into a "modern financial services group".

The cost of the changes contributed to a drop in pre-tax profits of more than a half to �64.4m last year.

But underlying earnings rose 7.5% to �174m, backed by a growth of one third in the number of pension and life assurance plans sold.

In the City, Britannic shares stood 34p lower at 934p at 1445 GMT.