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    Case: Manzana Insurance

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    saurabhsaurs
    The Fruitvale branch of Manzana Insurance has been unprofitable due to rising turnaround times, falling renewal rates, and increasing backlogs. Turnaround times have risen from 3 to over 6 days while the main competitor Golden Gate has improved times to 2 days. Renewal rates are down with late renewals increasing from 193 to 497. The branch also faces uneven work distribution among underwriting teams and insufficient staffing of the distribution team. Recommendations include changing to a FIFO system, pooling underwriting resources, revising turnaround time calculations, and adding staff to distribution to improve performance.

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    Case: Manzana Insurance

    Uploaded by

    saurabhsaurs
    283 views4 pages
    The Fruitvale branch of Manzana Insurance has been unprofitable due to rising turnaround times, falling renewal rates, and increasing backlogs. Turnaround times have risen from 3 to over 6 days while the main competitor Golden Gate has improved times to 2 days. Renewal rates are down with late renewals increasing from 193 to 497. The branch also faces uneven work distribution among underwriting teams and insufficient staffing of the distribution team. Recommendations include changing to a FIFO system, pooling underwriting resources, revising turnaround time calculations, and adding staff to distribution to improve performance.

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    Manzana Group 9

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    The Fruitvale branch of Manzana Insurance has been unprofitable due to rising turnaround times, falling renewal rates, and increasing backlogs. Turnaround times have risen from 3 to over 6 days while the main competitor Golden Gate has improved times to 2 days. Renewal rates are down with late renewals increasing from 193 to 497. The branch also faces uneven work distribution among underwriting teams and insufficient staffing of the distribution team. Recommendations include changing to a FIFO system, pooling underwriting resources, revising turnaround time calculations, and adding staff to distribution to improve performance.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    283 views4 pages

    Case: Manzana Insurance

    Uploaded by

    saurabhsaurs
    The Fruitvale branch of Manzana Insurance has been unprofitable due to rising turnaround times, falling renewal rates, and increasing backlogs. Turnaround times have risen from 3 to over 6 days while the main competitor Golden Gate has improved times to 2 days. Renewal rates are down with late renewals increasing from 193 to 497. The branch also faces uneven work distribution among underwriting teams and insufficient staffing of the distribution team. Recommendations include changing to a FIFO system, pooling underwriting resources, revising turnaround time calculations, and adding staff to distribution to improve performance.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    The key issues affecting the Fruitvale branch's profitability are rising turnaround times, falling renewal rates, and increasing backlogs of policies. The branch needs to address operational issues to streamline its processing activities and compete effectively.

    The problems include rising turnaround times, falling renewal rates, increasing backlogs of policies, and stagnating new policies. The branch is also less competitive than Golden Gate in terms of these metrics.

    Currently, the underwriting team resources are unevenly distributed, with one team overloaded while the others have spare capacity. Pooling the resources can help distribute the workload more evenly and improve overall capacity utilization.

    Operation Management Case Study

    Group-9

    2012
    CASE: MANZANA INSURANCE

    Disha Tak-1211181 Lipsa Rout-1211194 Saurabh Singh-1211221 Amrendra Kumar-1211168 Vishwajeet Kumar-1211234 Prashant Rangarajan-1211207

    1. Situation Analysis:
    This case talks about the problem faced by Manzana-Fruitvale branch in its operation. Profitability of the branch went down over the last couple of years; it has reported a loss of $121000 in 2nd quarter of year 1991. The main issues are falling renewal rate, the high backlog of policies and rising turnaround time. Certain issues with the process of handling requests have led to this reducing profitability, including the incorrect prioritization of requests and uneven allocation of workload amongst its three underwriting team. In addition to these, under staffing of distribution team has also affected the processing activity. Addressing these operational issues to streamline its processing activities is crucial to compete with Golden Gates, whose reducing turnaround time will be favored by agents.

    2a. Problems faced by the Fruitvale branch:


    As mentioned in the case, the branch was failing on every measure of performance. Problems faced by the Fruitvale branch of Manzana Insurance are followings: Rising Turnaround Time (TAT): In absolute terms, TAT grew over the last few years from ~ 3 days to more than 6 days in 2nd Quarter of 1991. On the other hand its major competitor Golden Gate has improved its TAT to 2 days and promised to further improve it to 1 day. Manzanas own survival is at stake if it is unable to reduce its TAT significantly from 6 days. Falling Renewal Rate: Number of late renewals (those completed after their due dates) were at an all time high. In absolute terms, this had increased from 193 (1st Quarter 1989) to 497 (2nd Quarter 1991). Due to this, they are losing their business to competitors. Increase in the backlog of policies and stagnating new policies: Over the years, number of backlogs have increased in absolute terms from 205 (1st Quarter 1989) to 471 (2nd Quarter 1991).

    2b. Key parameters on which Fruitvale are not competitive vis-a-vis Golden Gate:
    The following table represents the differences between Frutivale branch and Golden Gate in terms of the specified attributes: Attributes Turnaround Time New Policies Renewals Late Renewals Renewal loss rate Golden Gate (Estimated) 2 days 326 (2 quarter 1991) 1,063 (2nd quarter 1991) 44% 47%
    nd

    Manzana-Fruitvale 6 days 375 (2nd quarter 1991) 1,400 1991) NA 15% (2nd quarter

    3. Process Flow and Capacity Determination:


    Manzana insurance company caters to four kinds of policies RUN, RAP, RAIN and RERUN. All the policies except RAP go through five different steps as shown in the figure below. The % in the figure represents the capacity utilization at various stages.

    The three underwriting teams work separately with three different territories. This is leading to uneven distribution of work amongst the teams which is causing the policies to be late. The below table gives the capacity utilization values calculated for each territory. Time (in min) consumed in underwriting Total Working time = 6*20*7.5*60 = 5400 RUN Territory - 1 Territory - 2 Territory - 3 7063.2 4360 3836.8 RAP 28918 19494 19912 RAIN 4429.6 2825 2938 RERUN 11893.2 15708 11313.5 Total Time 52304 42387 38000.3 Capacity Utilization 96.86 78.49 70.37

    Following table explains the capacity utilization after pooling of resources in underwriting: Total Available Capacity Utilized % Utilization Capacity Distribution 216000 191761.5 88.78 Underwriting 162000 132691.3 81.91 Rating 432000 329411.6 76.25 Policy writing 270000 172916.1 64.04

    4. Recommendations:
    Following are the recommendations to help improve Fruitvales performance: 1. Switching to FIFO without priorities: FIFO system will reduce the losses which were occurring due to de-prioritization of RERUN cases. 2. Pooling of the underwriting team resources: Currently there is an uneven distribution of workload among the three underwriting teams. Team 1 is overloaded (capacity utilization of 96.86% ) when compared to the other two (78.49% and 70.37% respectively). After pooling the overall capacity utilization will be 81.92% leading to a reduction to losses and better utilization of resources. 3. Modification in turnaround time computation: a. Mean time should be used instead of 95% SCT which is statistically more accurate. With 95% SCT the turnaround time (TAT) = 8.2 days And when we use instead the mean the revised TAT = 4.72 days b. Policy processing time should be recalculated through latest surveys as there are significant changes in the process due to the advent of computers. 4. Deploy more people in the distribution stage: The below table shows the number of additional RERUN policies which can be addressed with 100% capacity utilization. Stages Distribution Underwriting Rating Policy writing Available work time 216000 162000 432000 270000 Currently utilized time 191761.5 132691.3 329411.6 172916.1 Remaining Time 24238.5 29308.7 102588.4 97083.9 Possible Additional RERUN policies 866 1567 1359 1938

    Data in the exhibit 6 of MANAZANA case shows that in Q 1 & Q 2 in 1991, the total number of late cases was 896 in Rerun. Hence, in distribution our capacity is not enough to cover all the cases even if we consider 100% capacity utilization. Thus increasing 1 more person in the distribution process will give us the capacity to completely remove the late policy cases.

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