Tower is planning to eventually have 12 branches around the country.
Dunedin is the first and has been chosen because of the long-time links with the city.
For Tower group managing director Rob Flannagan, the changes cannot come fast enough.
Companies had moved to a centralised call-centre operation which was promoted, providing better service and efficiency, but which was all about reducing infrastructure costs, he said in an interview.
"We saved diddly squat. Costs went up. There were economies in size in having people together but we went from renting in Dunedin to being in the CBD in Auckland.
"Whether we saved any money by closing Dunedin, I can't say. Centralisation was all about egos, control and male testosterone out of control."
Being in Auckland meant people had further to travel to work, parking was expensive and it became too easy to lose contact with customers, Mr Flannagan said.
Things like car, life and health insurance were "grudge insurance" people bought because they had to.
However, when there was an accident or the need to claim on any insurance, it became an emotional experience in many ways.
"It is too easy for people to say `no' over the phone.
When it comes down to the claim side, we were told the phone was the best media.
We forced people to use the phone, resulting in a big loss of connection.
"That is one reason we are going back to our roots. It is people dealing with people."
The other reason was having an employment pool outside of Auckland, he said.
Dealing with local people added to the ease of settling claims.
If someone had an accident coming out on the road from Dunedin International Airport, a local person would understand that situation, where someone in Auckland would think you should not have been so careless, Mr Flannagan said.
"It increases customer experience and gives better service. If we are good at that, it creates business opportunities through people renewing their policies."
Tower could, in Dunedin, accommodate people working part-time and people who had families and needed flexible working hours.
That added to the image of the company as being able to accommodate change, he said.
"We are feeling our way a bit. We want to get the model right. Dunedin has a large customer pool for us to start with. Head office types sometimes lose sight of what is going on out there. Let's focus on what's important."
The Dunedin office, in Filleul St, would have general insurance agents, health insurance people and, eventually, financial planners who would use the office as their base.
Tower officially opens the office next Friday (August 28).
The company started in Dunedin in 1869 as the Government Life Insurance Office.
In 1989, Government Life and National Insurance became one, resulting in Tower being formed.
