Tower axes over hundred jobs to offset costs, says 'digital is the way of future'

New Zealand-based general insurer Tower's CEO is planning to cut 108 jobs as part of its cost-saving initiative, saying "digital is the way of the future". The company aims to cut cost by NZ$7.2 million ($4.46 million) per year.

Tower Insurance chief executive Richard Harding said the decision is a part of its strategy to move to a digital-centric and flexible business model, given the "current recessionary environment". He believes that the new technology simplifies and automates many functions that enable productivity gains.

Harding stated that the company's strategy is to become a "digital challenger brand, taking on the big incumbents and challenging outdated industry norms".

With this strategy, the company plans to create new flexible and part-time roles, which it believes will enable more effective interaction with the customers.

Tower reported a half year profit of NZ$14.9 million after tax, a NZ$3 million improvement on the same period last year.

The company highlighted that almost 60 percent of its new business came through digital channels and over 40 percent of claims were lodged online in March.

"Our strategy saw us growing our business from our existing cost base, making minor additional adjustments where needed. However, the current recessionary environment means that growth will now be lower than we had planned for, and to offset that, we need to reduce costs," said Harding.

"We are currently working through a process to deliver cost savings of 7.2m per year, which includes a proposal for 108 redundancies, along with other cost-out initiatives."

Harding added: "As part of our ongoing shift to become a digital company with a more flexible workplace, we are also proposing to create 30 new flexible and part-time roles that enables us to respond more effectively to the new, digital ways that customers interact with us."

Harding explained: "The growth we are achieving through digital channels and the number of customers now choosing to interact with us online shows that digital is the way of the future and that we are on the right path."