Hill House Hammond's head office will close by the end of 2004

The group said closing its national broker subsidiary would result in around 1,200 compulsory redundancies.

It added it was in advanced talks with a potential buyer for the commercial insurance division of HHH.

The firm said: "We believe these changes are needed for us to remain competitive and adapt to changing market conditions."

As well as closing HHH's head office in Bristol, the firm's 240 offices and branches across the UK will also shut.

Shake-up

Aviva added that HHH's home, motor and travel insurance business would be transferred to Norwich Union, which is also part of the Aviva group.

The shake-up follows a strategic review of the HHH operation with a view to cutting costs.

Hill House Hammond Managing Director, Ken Applegate, said: "This is as a result of customer shopping habits changing. Increasingly customers buy insurance direct over the phone, or on the internet.

One of our areas of focus is to help our staff through this process. Ken Applegate

"Also many people are going into the supermarket and getting insurance while buying their groceries," he said.

Staff redeployed

Aviva added that of the 1,600 jobs being axed at HHH, 400 staff would be redeployed.

At the firm's head office in Bristol 400 of the 500 staff are facing compulsory redundancy, with 100 of those being redeployed to Norwich Union sales staff.

In addition, 450 jobs will be created at Norwich Union Direct's UK call centres to help handle business moved from HHH.

Mr Applegate added: "One of our areas of focus is to help our staff through this process, and help them find new jobs as theirs come up for redundancy."

Those posts will be created by the end of the year at centres in Norwich, Sheffield, Liverpool, Perth and Bishopbriggs, near Glasgow.

HHH will undertake a 90-day consultation programme with staff over the job losses.