Norwich Union, part of the insurance giant Aviva, has unveiled plans to cut almost 1,700 UK jobs by the end of the year as it nears the end of a three-year efficiency drive.

The biggest household insurer, whose parent is phasing out the brand name, said it would cut 1,100 permanent roles as well as a further 590 contract workers.

Because some of the reduction in numbers will come from cancelled job vacancies and staff redeployed elsewhere, the number of permanent staff that will lose their jobs will be about 800, Norwich Union said.

Most of the cuts will take place in the "business change" and IT departments, the insurer said.

Mark Hodges, chief executive of Norwich Union Life, the UK life insurance arm, said the job losses, which sparked fury among unions, were "unfortunate but inevitable" as the insurer approaches the end of a three-year streamlining plan.

"Making decisions that affect our people is always difficult and we are fully committed to doing everything we possibly can to minimise the number of compulsory redundancies. Our priority now is to work with everyone affected by today’s announcement and to support them however we can," Mr Hodges said.

He said the insurer would now begin consulting unions about the losses.

But unions, which leaked details of the cuts before they were officially confirmed, reacted with anger. Unite, which dominates the banking sector, said it had been told that Aviva's offices in York and Norwich would bear the brunt of the losses.

Norwich Union has about 6,500 staff based in offices in East Anglia, where its general insurance division and the RAC roadside recovery business are headquarted. Norwich Union's life insurance arm in the UK is based in York.

About 349 staff face the axe in York, while 226 employees will have to go in Norwich, the insurer said. Norwich Union will not renew deals with 222 contract staff in York and 254 contractors in Norwich, it said.

Derek Simpson, Unite joint general secretary, said: "Today we see a scenario where a company that is continuing to deliver positive results is slashing the staff that have enabled them to weather the current financial storm.

“Unite is angry that Aviva is repeating what appears to be an annual exercise of cutting thousands of staff. It is unacceptable that once again shareholders received their full dividends, while the workers who brought the company this success are rewarded with job losses."

Earlier this month, the insurer reported a bumper post-tax annual loss of £7.7 billion, but an increase in operating profits, using a new accounting standard.

But it raised eyebrows with a decision at the same time to press ahead with a final dividend of 33p a share at an estimated cost of £500 million.

Aviva shares were 3.6 per cent higher, up 8.25p at 235.5p.

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