Norwich Union owner Aviva today said it will cut 4,000 jobs in the UK by 2008.
The UK's biggest insurer said 1,000 jobs will move to India while a further 500 roles in IT will be contracted out.
The move is part of a plan to cut costs and "improve efficiency" at Norwich Union in the UK.
Aviva said the job cuts would reduce duplication in marketing, human resources, finance and IT.
"The company will seek to minimise the number of compulsory redundancies through natural staff turnover and voluntary measures," Aviva said in a statement to the stock market.
The firm said the job move followed a change in the way people buy insurance with more customers now using the internet.
Norwich Union chief executive Patrick Snowball said: "We have to ensure that Norwich Union remains a highly efficient and effective company in what is an increasingly competitive and dynamic environment.
"Customers' buying habits are changing rapidly as technology becomes more accessible. Already half our new direct motor insurance policies are purchased over the internet."
He added that more and more people were now working in a "self-service world".
"The integration and efficiency measures we are announcing today are part of a programme which will result in an increase in customer focus across our UK businesses along with better and more efficient use of technology," said Mr Snowball.
Aviva said the job cuts in general insurance and life insurance would reduce its UK workforce from 36,000 to 32,000 and save the company £250 million a year from 2008.
The 1,000 jobs to be moved to India are part of a previously-announced plan to send 7,800 jobs offshore. The insurer already has 5,250 workers in India and a further 250 in Sri Lanka.
The blow to the workforce came just a month after Aviva posted a 27% rise in half-year profits to £1.7 billion following a strong pick-up in the UK pensions market.
Union leaders said they were "disgusted" by the announcement, and complained there had been no prior consultation with the workforce.
Dave Fleming, national officer of Amicus, said: "Loyal staff at Norwich Union will hear this news on the radio and television. This is no way for a company to do business. From the little we know we don't accept the company's strategy."
He said on BBC Radio 4's Today Programme that up to 2,000 of the redundancies would be compulsory.
"I am informed at the same time, which is one that's very hard to stomach, that of those number of jobs 1,500 in IT and in processing are going to Aviva's operation in India.
"Amicus' view on that of course is one of extreme anger because we have a zero tolerance of offshoring jobs leading to compulsory redundancies."
Derek Simpson, the union's General Secretary said: "Another 4,000 quality jobs have been sacrificed on the altar of a flexible labour market.
"The Government is sitting back while jobs are leaking out of Britain only to be replaced by temporary, agency, low-paid part-time work.
"This is really bad news and will have even more disastrous effects electorally across the country."
Mr Fleming added: "This is absolutely brutal. Compulsory job cuts and offshoring on this scale will not be accepted by us or our members.
"This is a betrayal of their long-serving workforce who have woken up to the news on the media this morning that their jobs are going rather than hearing it from their employer.
"The fact that they are offshoring half of the work and sub-contracting some of that will have service implications for customers as well as staff.
"They are treating their staff with contempt and clearly have more regard for their shareholder profits than their UK workforce."