Introduction

Manzana Insurance is the second largest Insurance company in the property Insurance in California. Main competitor:Golden Gate. In 1989 acquisition by Banque De Soil. Case concern is about the FruitVale Branch. Manzana did not deal directly with public,deals with agents.

 Property Insurance :65% of revenue and Liability Insurance:20 % of revenue. FruitVale branch deals with 76 agents.

Request for Underwriting.(RUN) Request for renewal(RERUN) Request for additional Insurance(RAIN)

Operational Flow

Operational Flow Cont

Process starts with when distribution clerks receives written request from agents

Distribution(Clerks)

Underwriting

Underwriting team took responsibility for evaluating,selecting,classifying and pricing it.

Rating Department calculates the policy premiums.

Rating

Actual typing, assembly and distribution of policies takes place.

Policy Writing

Current Business Scenario

Branch offices in California, Oregon and Washington.

Treat each branch as separate profit and loss centre.

Sales force consist of about 2000 independent agents

Manzana insurance is mainly specialized in Property insurance

Property liability Insurance

Commercial insurance

Personal insurance

Property insurance

Liability insurance

operation flow

Business Scenario
Adoption of back to basic strategy concentrating its efforts on cost control Rebuilding of Manzana share of the property insurance market Improvement in its financial performance in terms of revenues and sales growth in comparison with previous year To gain market shares from its main competitor-Golden Gates

Problems
Impact on branch possibility.

Customer base retention

Action plan to tackle late renewal

Major issues at the Fruitvale Branch

Problem 1: Average turnaround time (TAT) is too lengthy.
TAT in days
7 6 5 4 3 2 1 0

TAT in days

1
DAY
GUARANTE E
Golden Gate

TAT in days

2nd Quarter of last year

2nd Quarter of this year

Manzana Fruitvale

Problem 2: Large number of late renewals.

% of policies accounted

RUN RAP RAIN RERUN

Renewals or RERUNs are not issued to the Distribution Clerks until the day before they are due. Agents expect a renewed contract offer before the expiration of the old policy. Late renewals result in a large renewal loss rate.

Problem 3: Large backlog of policies.

The consistency of late RERUNs from the Underwriting department lead Rating department unable to address its backlog

Problem 4: Organization structure and operations 60 workflow are not optimal. 60

Improper load balancing among employees, resulting in tight schedules and idle time

50 40 30 30 20 10 0 Review & Distribution Underwriting Time required 26.67 20 22.5

46.67 37.5 27.5

Rating Time available

Policy writing

Capacity utilization rate

=Time required / Time available

88.9%

88.9%

77.78%

73.33%

Factors Affecting the Performance

Prioritizing:

Companys policy was to use FIFO system at each stage. General perception that customers will anyway renew their policies. RUNs, agents receive 25% commission. In case of RERUNs, they receive only 7%. Agents and employees emphasis is on following for new requests. Results in increased backlog of RERUNs (ReNewals)

Underutilization capacity utilization calculation shown in exhibit 2 is below 80% for rating and policy writers.

Increased waiting time and uneven pattern of loads given by utilization team Teams in Exhibit 4 show Team 1 - 97%, Team 2 78% Team 3 70% situations where one team is completely loaded others might be Starving So Strategy of allocating work might not be correct.

 Territory 1 is running close to its peak capacity, results in substantial delays requests, especially RERUNs,RAINs Territory 2 is being stretched at an unsustainable level.

Territory 3 is running at an effective capacity Underwriters are indeed the bottleneck in the process

Loss of Renewals
According to the data given :

44% of renewals processed late 47% of renewals lost Company gives very short notice for RERUNs to agents, They recommend other insurance agencies to clients. Inability of the company to provide timely processing of RERUNs. loss of a large volume of valuable customer base. Reducing its revenue and hence the profitability.

Automation of Rating and Policy Writing Stages

The Fruitvale branch spends 2/3 of the processing time on these two stages. Both can be largely automated with latest computers implement technological developments Manzana cannot compete with Golden Gate Chance that staff freed-up in this area can develop the skills needed in the Bottleneck stages.

OBSERVATIONS

Turnaround Time (TAT)

Instead of 95% Standard Completion Time (SCT), use Mean Process Time (from 8.2 Days to 4.72 Days) TAT will not always be addition of through put time of all four processes : Distribution, Underwriting, Rating and Policy Writing

Total Turnaround Time (TAT)

Operating Steps RUNs RAPs RAINs RERUNs Workers/Teams Total Through-put Time Number of Requests 1 3 1 11 Distribution Mean Time 4 0.316666667 68.5 50 43.5 28 Total Time Taken 68.5 150 43.5 308 Number of Requests Underwriting Mean Time Total Time Taken Number of Requests Mean Time Total Time Taken 4 43.6 174.4 5 75.5 377.5 5 71 NA 355 NA TOTAL 10 38 380 12 64.7 776.4 0 7 22.6 158.2 8 65.5 524 9 54 486 47 18.7 878.9 54 75.5 4077 56 50.1 2805.6

1.178888889

Rating

1.598583333

Number of Requests Policy Writing Mean Time Total Time Taken

1.620711111

4.71485

Underwriter Disparity
Underwriter 1 RUNs Territory 1 Mean Time Total Time 162 43.6 7063.2 RAPs 761 38 28918 RAINs 196 22.6 4429.6 RERUNs 636 18.7 11893.2 52304 29.80285 14.625 435.8667 96.85926 TOTAL 1755

Average Processing Time per request Total Requests per day Average Time utilized per day Capacity Utilization

Underwriter 2
RUNs Territory 2 Mean Time Total Time 100 43.6 4360 RAPs 513 38 19494 RAINs 125 22.6 2825 RERUNs 840 18.7 15708 42387 26.86122 13.15 353.225 78.49444 TOTAL 1578

Average Processing Time per request Total Requests per day Average Time utilized per day Capacity Utilization

Underwriter 3 RUNs Territory 3 Mean Time Total Time 88 43.6 3836.8 RAPs 524 38 19912 RAINs 130 22.6 2938 RERUNs 605 18.7 11313.5 38000.3 28.21106 11.225 316.6692 70.37093 TOTAL 1347

Average Processing Time per request Total Requests per day Average Time utilized per day Capacity Utilization

Capacity Utilization

100

90

80

70

60 Capacity Utilization 50

40

30

20

10

0 Underwriter Team 1 Underwriter Team 2 Underwriter Team 3

RECOMMENDATIONS

FIFO: RERUNs should be given equal priority. TAT can be improved through balancing load on Underwriting teams. Commission structure can be changed upto 15% for RERUNs Variable pay for employees based on processing time Multitasking by Policy Writers in case of overload of RAPs

THANK YOU