NORWICH Union has asked a team of management consultants to look at its Irish operation to see if it can become more efficient.

Coopers & Lybrand will spend eight weeks examining all aspects of the company's business in Ireland. This moved comes as its parent company in Britain moved to block people cashing in on a possible flotation of the group by taking out life assurance policies now.

Typically when life assurance, companies float on the stock market, policy holders are in line for substantial amounts of free shares, as was the case when Irish Life became a public company.

Norwich Union has 175,000 policy holders in Ireland, but it is by no means certain whether all of these would qualify for shares in the event of a flotation.

If there is a flotation, it is likely that Norwich Union would confine issues of free shares to long term investors such as those with life assurance policies and pension investments with the group.

However, Norwich Union's Irish chief executive, Mr Vincent Sheridan, told The Irish Times that the consultancy work was an "absolutely separate" issue.

Like all financial companies we want to become more efficient " he said, "and sometimes one can gain something by using outside consultants."

He said costs were always an issue and Coopers & Lybrand would be examining these and revenue issues, as well as organisational structures. He added that he had already written to staff in bringing them of the consultants' appointment and he would be meeting staff over the next few weeks. "This is not a big project, by normal standards," he said.

Norwich Union employs 550 people in Ireland. In January the company reported no growth in premium income for 1995 and new business sales remained at 1994 levels of £12.7 million. The figures were in line with competitors, who all had a difficult year on the life side of the business. At yesterday's annual meeting the parent company in Norwich, board asked policy holders to it to withdraw membership rights from the life assurance policies it sells. The resolution was passed with no contesting votes.

A Norwich spokeswoman stressed the move was a "piece of contingency planning" rather an indication the board had taken decision to demutualise.

This does mean that membership is now closed. This gives us the power to close membership rather than calling another general meeting should it be required later," she said.

Norwich Union policy holders could receive free shares worth between £600 and £800 if the insurer floated on its own, while the figure would be higher if it were taken over, as members would have to compensated for their loss of ownership.

Speculation about a merger plan has increased since last week's announcement by Royal Insurance and Sun Alliance that they plan to join to form a £5.4 billion sterling company.

Mr Sheridan said the Irish operation had not seen a rush to buy policies since the idea of floating the group was first mooted. He said taking out life assurance policies was a bigger decision than just opening an account. The right policy was more important than any perceived benefit from flotation.

Mr Sheridan said consultants had been looking at the issue of demutualisation since last October, but this was a process which was being driven from Britain. He said no decision had been made on the issue

At the meeting the chairman, Mr George Paul, told members Norwich Union still intended to put its recommendations for the future to the membership before the end of the year.