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    Manzana Insurance - Group 7

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    Sandhya Patil
    The document summarizes issues facing Manzana Insurance's Fruitvale branch, including declining profitability due to a falling renewal rate and rising turnaround time. The main causes are understaffing in distribution and underwriting teams, incorrect methodology for computing turnaround time, and competition from Golden Gate offering faster turnaround. Major issues include a sharp rise in renewal loss rate and Manzana's turnaround time needing reduction to compete with Golden Gate's one day service. The document analyzes Fruitvale's processes and priorities, identifying problems like late processing of renewals and uneven workload distribution. It recommends enforcing FIFO priorities, increasing headcounts, reviewing territorial underwriting, automating rating and policy writing, and revising the

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    Manzana Insurance - Group 7

    Uploaded by

    Sandhya Patil
    910 views13 pages
    The document summarizes issues facing Manzana Insurance's Fruitvale branch, including declining profitability due to a falling renewal rate and rising turnaround time. The main causes are understaffing in distribution and underwriting teams, incorrect methodology for computing turnaround time, and competition from Golden Gate offering faster turnaround. Major issues include a sharp rise in renewal loss rate and Manzana's turnaround time needing reduction to compete with Golden Gate's one day service. The document analyzes Fruitvale's processes and priorities, identifying problems like late processing of renewals and uneven workload distribution. It recommends enforcing FIFO priorities, increasing headcounts, reviewing territorial underwriting, automating rating and policy writing, and revising the

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    Manzana

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    Manzana Insurance_group 7

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    The document summarizes issues facing Manzana Insurance's Fruitvale branch, including declining profitability due to a falling renewal rate and rising turnaround time. The main causes are understaffing in distribution and underwriting teams, incorrect methodology for computing turnaround time, and competition from Golden Gate offering faster turnaround. Major issues include a sharp rise in renewal loss rate and Manzana's turnaround time needing reduction to compete with Golden Gate's one day service. The document analyzes Fruitvale's processes and priorities, identifying problems like late processing of renewals and uneven workload distribution. It recommends enforcing FIFO priorities, increasing headcounts, reviewing territorial underwriting, automating rating and policy writing, and revising the

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    910 views13 pages

    Manzana Insurance - Group 7

    Uploaded by

    Sandhya Patil
    The document summarizes issues facing Manzana Insurance's Fruitvale branch, including declining profitability due to a falling renewal rate and rising turnaround time. The main causes are understaffing in distribution and underwriting teams, incorrect methodology for computing turnaround time, and competition from Golden Gate offering faster turnaround. Major issues include a sharp rise in renewal loss rate and Manzana's turnaround time needing reduction to compete with Golden Gate's one day service. The document analyzes Fruitvale's processes and priorities, identifying problems like late processing of renewals and uneven workload distribution. It recommends enforcing FIFO priorities, increasing headcounts, reviewing territorial underwriting, automating rating and policy writing, and revising the

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    At a glance
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    Manzana Insurance was founded in 1902 in California and by 1953 was the largest home and property insurer. It was acquired in 1989 by Banque du Soleil and operates through a network of autonomous units with each unit acting as a profit center. The salesforce consists of around 2000 independent agents who are paid commissions.

    The Fruitvale branch of Manzana Insurance is suffering from declining profitability due to a falling renewal rate and rising turnaround time. The main causes are understaffing in distribution and underwriting teams and an incorrect methodology for computing turnaround time. There is also a threat from Golden Gate Insurance which has a quicker turnaround time.

    The major issues facing Manzana Insurance are a sharp increase in renewal loss rate from 33% to 47% in the last year. Renewals are also not automatically recommended to insurers, causing them to sell other products. Manzana's turnaround time also needs to be reduced to match Golden Gate's promise of just 1 day against Manzana's current 4-5 days or more.

    MANZANA INSURANCE

    GROUP 7 VIVEK JOSHI (B028) ANKUR SRIVASTAVA (B055) SAURABH BAGRI (D008) ABHIRUP BHATTACHARYA (D016) SHWETANK SHARMA (D055)

    Manzana Insurance
    Founded in California in 1902 By 1953, was the largest home and property insurer Acquired in 1989 by Banque du Soleil Operates through network of autonomous units Each unit acts as a profit center Salesforce of about 2000 independent agents Agents paid 25% commission for a new insurance and 7% commission on renewals

    What are the problems that the Friutvale Branch is facing? What are the causes of these problems?
    Manzanas Fruitvale branch is suffering from declining profitability. The main issues resulting in this phenomenon are its falling renewal rate and rising turnaround time. Problems of understaffing in the Distribution and Underwriting teams and possible idle capacity in the Rating and Policy Writing teams. incorrect methodology for computing turnaround time. Threat posed by Golden Gate with a quicker turnaround time which may divert several of the agents involved.

    Major Issues
    Sharp increase in renewal loss rate, from 33% to 47% in the last year. Renewals are not automatically recommended to insurers causing insurers to sell other products Manzanas TAT needs to reduce as Golden gate is promising a turnaround time of just 1 day against existing turnaround for Manzana at 4-5 days or more.

    Analyze current processes used to handle various types of service requests. What is your assessment of the rules used to assign priorities in Fruitval operations? Can you identify the problems in the way Manzana is calculating turnaround time in Exhibit 3 of the case?

    Late processing of RERUNs due to prioritization Renewals, or RERUNs, are not issued to the distribution clerks (DCs) until the day before they are due. This would be fine if the DCs were idle or if RERUNs were a top priority from there, but employees systematically deprioritise RERUNs in favour of securing new business through RUNs and RAPs. Solution: 1. Enforce the companys official FIFO policy and not have any prioritisation rules 2. One day notice for DCs should be increased to three days to ensure sufficient time for a renewed contract offer to reach the agents on or before the expiration date of the old policy Insufficient Capacity The utilization rates based on Tom Jacobs calculations and exact utilization rates
    Distribution Tom Jacobss 89% calculation 89% Exact calculation* Underwriting Rating 89% 82% 78% 76% Policy Writing 73% 64%

    Capacity Utilisation
    Distribution
    a) Weighted average processing time (Exhibit 4) b) Total Capacity (1/ a * 60 * capacity available) c) Total requests per day (22 +17) Capacity Utilization ( c / b ) 41mins/ request

    Underwriting
    28.4mins/ request

    Rating
    70.4mins/ request

    Policy writing
    54.8mins/reque st

    43.9 (1/41 * 60 * 30hrs)

    47.54 (1/28.4 * 60 * 22.5hrs)

    51.14 (1/70.4 * 60 * 60hrs)

    41.06 (1/54.8 * 60 * 37.5hrs)

    39

    39

    39

    29 (75%)

    89%

    82%

    76%

    70%

    Unbalanced workload amongst the Underwriting teams This is particularly likely to happen in the Underwriting team, who are only allocated jobs from specific agents. This can result in an uneven volume of work for each territorial team
    Territory 1 Number of requests (H1 91) Requests per day (120 days total) Time required (using 28.4min each) Utilization (using 450mins available) 1867 15.6 443.04 98.4% Territory 2 1657 13.8 391.92 87% Territory 3 1430 11.9 337.96 75%

    Automation of Rating and Policy Writing Stages The Fruitvale branch spends 2/3 of the processing time on these two stages, suggesting they have not capitalized on technological developments.

    Problems with the current measurement system for TAT


    Based on the current system the manager calculates TAT assuming that various activities wait for earlier activities to complete before commencing. The current measurement system for turnaround time is based on the SCTs calculated in 1986, before the development of computerized rating and policy writing, the liability crisis and subsequent takeover of Manzana by Banque du Soleil and the switch of focus to property insurance only for the Fruitvale branch. The use of the 95% SCT itself is misleading, as it ignores the 5% of requests that are most time consuming. The processing times used have the staffs unofficial prioritization process inherent within them. They do not therefore accurately reflect the processing times required for the requests if the official FIFO method were employed.

    DC no of requests request per person 95% SCT Time required UW backlog no of requests request per team 95% SCT Time required UW new no of requests request per team 95% SCT Time required Rating backlog no of requests request per person 95% SCT Time required Rating new no of requests request per person 95% SCT Time required PW backlog no of requests request per person 95% SCT Time required PW new no of requests request per person 95% SCT Time required PW last no of requests request per person 95% SCT Time required

    1.0 0.3 128.1 32.0 3.0 1.0 107.2 107.2 1.0 0.3 107.2 35.7 1.0 0.1 112.3 14.0 4.0 0.5 112.3 56.2 0.0 0.0 89.3 0.0 5.0 1.0 89.3 89.3 1.0 0.2 89.3 17.9

    3.0 0.8 107.8 80.9 7.0 2.3 87.5 204.2 3.0 1.0 87.5 87.5 2.0 0.3 88.7 22.2 10.0 1.3 88.7 110.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.2 0.0 0.0

    1.0 0.3 68.1 17.0 6.0 2.0 49.4 98.8 1.0 0.3 49.4 16.5 1.0 0.1 89.4 11.2 7.0 0.9 89.4 78.2 1.0 0.2 72.1 14.4 8.0 1.6 72.1 115.4 1.0 0.2 72.1 14.4

    11.0 2.8 43.2 118.8 36.0 12.0 62.8 753.6 11.0 3.7 62.8 230.3 7.0 0.9 92.2 80.7 47.0 5.9 92.2 541.7 2.0 0.4 67.0 26.8 54.0 10.8 67.0 723.6 1.0 0.2 67.0 13.4

    4.0team members 0.6days

    3.0team members 2.6days

    3.0team members 0.8days

    8.0team members 0.3days

    8.0team members
    1.7days

    5.0team members 0.1days

    5.0team members 2.1days

    5.0team members 0.1days 4.4days

    If you were Bill Pippen, what would you recommend that Fruitvale do?

    Recommendations
    Enforce the FIFO policy on all requests, ensuring that RERUNs are not deprioritised and protecting Manzanas largest revenue stream
    Headcount for the Distribution and Underwriting departments needs to be increased as the departments are understaffed as indicated by their utilization rates which are not able to cope with variability in demand.

    The territorial system for underwriters needs to be reviewed. A strategic choice is required on whether to sacrifice the personal relationships between underwriters and agents in favour of improved turnaround times. If Manzana are to maintain these relationships possibly giving them a point of difference over Golden Gates model they should balance the expected workloads and investigate which requests have to go to territory teams and which can go to anyone available.
    Technological developments in the computerization of the Rating and Policy Writing stages The system and the methodology for computing TAT needs to be reviewed based on an updated SCT and employing the methodology set out above.

    Thank you

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