The company’s head of customer claims support, Alison Maitland, said about 45 per cent of all customer service officers would be made redundant.

The company’s head of customer claims support, Alison Maitland, said about 45 per cent of all customer service officers would be made redundant. Photo: Glenn Hunt

Medibank Private will cut more than 40 jobs from its Melbourne office as it automates the processing of customer claims, in a move the government-owned health insurer has distanced from its upcoming $4 billion privatisation.

In a memo sent to staff on Monday, seen by The Australian Financial Review, the company’s head of customer claims support, Alison Maitland, said about 45 per cent of all customer service officers would be made redundant. A spokeswoman confirmed the restructure would affect about 40 of the team’s 110 employees.

Staff were told that two types of insurance claims not yet outsourced to Fuji Xerox Document Management Systems would be transferred soon. “This means that we will no longer need to receive and sort claims received in the mail or undertake manual data entry for these two claim types,” the memo said. “As such, a new structure, with a reduced number of roles, is being proposed.”

Medibank, which is the country’s largest health insurer, said it would consult with staff in the coming week before moving to compulsory redundancies on Wednesday, July 9. In a “frequently asked questions” document, the company said the changes were not related to the federal government’s planned float of the insurer. “These proposed changes are part of Medibank managing its business as usual,” the document said.

Beth Vincent-Pietsch, the deputy secretary of the Community and Public Sector Union, which represents Medibank employees, said the union would fight the redundancies of what it says are up to 60 jobs. “Unfortunately staff have little say in the matter,” she said. “In a little over a week it will be Medibank Private that decides if they get to keep their jobs for now. That uncertainty will only increase the closer we get to the sale date.”
‘This is likely to be the beginning of more job cuts’

Ms Vincent Pietsch said staff do not believe the company’s assertion that there is no link to the sale of Medibank. “The sacking of up to 60 staff has sent tremors through the workforce because they know this is likely to be the beginning of more job cuts,” she said.

Even if the proposed redundancies are not related to Medibank’s listing, they still illustrate the potential to drive earnings by cutting costs. Many fund managers will see this as an attractive quality when considering whether to invest in Medibank.

The insurer is one of the least efficient health insurers, despite having a 30 per cent market share. Analysts believe its 9.2 per cent management expense ratio, which measures the cost of administering policies against revenue, could be much lower than the industry average of 8.8 per cent because of its size advantage.

The announcements come as Street Talk has revealed that investment banks working on the deal will begin taking Medibank managing director George Savvides for his first meetings with potential investors next week.

The timing of the float is not yet confirmed, but Finance Minister Mathias Cormann has said, subject to market conditions, it should occur before the end of the 2014-15 financial year.

A Medibank spokeswoman said redeployment would be available for some employees affected by the job cuts. “Streamlining” would also lead to a small number of roles in corporate sales, technology and corporate services being affected, she said.

“Our first priority with all of these changes is to redeploy employees within Medibank,” she said. “Where this is not possible we offer outplacement and transition support.”

At the same time, the company will bolster its face-to-face service by adding 30 new retail centre managers to its network of 83 stores and nine shopping mall kiosks. Across the country, Medibank employs about 4000 people.