Prof B. Mahadevan
Group 12 (Section B)
Peeyush Razdan (0811115)
Shalekh Banka (0811124)
Shalem Anand Tirkey (0811125)
Shreshth Sharma (0811128)
Sumeet Mittal (0811131)
As per the case facts, Manzana Insurance’s Fruitvale branch is the least performing branch and the senior VP seeks a report on the same. Their competitor Golden Gate (backed by its corporate parent generated a price war to gain market) is performing much better in terms of most metrics of Insurance business.
1) Problems faced by Manzana Insurance (Fruitvale branch)
a) High Turn Around Time (TAT)
Agents in the insurance sector are mediators who act as an interface between the client and the insurer. Hence, the quality of service, measured by average TAT, to the agents (who are common to the competitors) is of primary importance.TAT for Fruitvale has deteriorated to 6 days (1991) from 5 days (1990), while Golden Gate’s offer of 1 day TAT is luring agents away from Manzana. The number of late renewals is also increasing and quite high compared to Golden Gate.
b) Geographic/Territorial Allocation to Underwriting Teams Leads to an Uneven Task Distribution We observe that the geographic allocation of agents to the underwriting teams is not optimal. This method has an inherent problem; there can be a surge in requests from a geography which might overload that particular team while the other teams might be idle due to lack of requests from their geography. Hence, their pooling should be rather than using the geographic allocation.
c) Primary focus on RUNs rather than RERUNs and Increasing late Renewals Currently, Fruitvale is focusing on RUNs for getting new customers and compromising the service towards the RERUN requests for the existing customers. Loss of focus on RERUNs has led to increase in its TAT causing agents to move towards Golden Gate. The number of late Renewals has increased from 20% to 44% over the last year which has led to a significant increase in the Renewal loss rate from 33% to 47%. Renewal is a low premium - high volume business. Exhibit 5(in case) shows that a new policy and policy renewal give similar revenues of $6724 and $6205 respectively. The commission given to agents is 25% and 7% respectively. So in fact renewal of old insurance brings more revenue due to reduced commission percentage. Also, the time taken for renewal of policies is less, thus more renewals can be done in a given time.
d) FCFS Scheduling may not be always optimum
Most of the departments follow FCFS scheduling which may not be optimum. Ex. a policy with an effort of 4 hrs would delay all the other smaller policies behind it, effectively delaying 10 simple requests for serving one difficult one. Moreover, the scheduling policy followed across various departments is not same. While some strictly follow FCFS others do it on type of policy ex: RUN preferred over RERUNs. Also, The RAP is given preference over RERUNs by the rating team. The RAPs in fact take more time for processing than RERUNs. Also, only 15% of all quotes result in new policies. Thus, the Manzana Fruitvale branch seems to be servicing RAPs at the cost of RERUNs.
e) Huge backlog of policies
The existing backlog of policies is quite high, due to which any new policy received is not attended instantly (due to FCFS) further adding on to existing backlog, essentially creating a cascading effect.
2) Process Flow and Capacity Analysis
We have used process flow, capacity analysis, Lead Time Analysis and Average daily Workload Analysis to analyze the current situation at Manzana’s Fruitvale Branch.
a) Process Flow
Exhibit 1 shows the process flow diagram with the existing capacity across the four major team Distribution clerks, Underwriter teams, Raters, Policy...