ERGO restructure could cost 1,800 jobs

Munich Re subsidiary ERGO is restructuring in an effort to cut costs and pivot towards increasing digitalisation.

The company said that it is investing around one billion Euros in an effort to cut around 540 million Euros in costs. ERGO added that the restructuring will also lead to ‘unavoidable’ job losses for around 1,800 employees, stating that it plans to make these cuts as ‘socially compatible’ as possible.

“ERGO is taking its brand promise ‘To insure is to understand’ to the next level. We will be orienting ourselves very systematically to customer needs. To do that we must become leaner, more efficient and digital. That is how we will realise the transformation of the insurance business model,” said Markus Rieß, chief executive officer of ERGO Group and member of the board of management of Munich Re.

ERGO announced it will be streamlining sales by consolidating agency sales, which will result in exiting 18 locations in Germany. ERGO stressed that it will retain a presence in all regions and will also intensify the interaction between special sales business such as broker or partner sales and the business fields. At the same time ERGO will strengthen its headquarters support for sales partners through what it described as a ‘stringent new organisational structure’.

However, German services trade union Verdi released a statement claiming that it calculated that the job losses would be more in the region of 3,000 employees, adding that this would be the largest staff cuts in the history of the company. "These plans are so brutal that a socially acceptable implementation is hardly possible", criticized Frank Fassin, Verdi representative at ERGO.