Prof Janat Shah
Submitted By -
P R Prashanth
Prateek Kumar Singh
Shekhar Singh Chauhan
Table of Contents
The state of the business5
Analysis of Backlogs and TAT8
Analysis of Turnaround time without backlogs11
Clearance of backlog13
Staffing of policy and rating departments13
Company Background: Manzana Insurance was founded in 1902 in California and specialized in orchard and farm insurance then. But, a series of acquisitions followed the San Francisco earthquake and by 1953, Manzana was the second largest property insurer in California.
In the 1970s, it faced intense competition from Golden Gate Casualty, a new entrant in the home insurance business. Golden Gate could spend on intensive marketing and spark off price war due to the backing of its corporate parent, one of the largest retailers in the world. The high interest rates during this period also adversely affected Manzana’s property insurance business. Hence, Manzana started venturing into other business areas and began insuring liability too. From almost no liability policies in the mid 60s, it went to almost a 50-50 split between liability and property insurance in the 1980s and now, 65% is property while 20% is liability insurance. But unfortunately due to the insurance crisis of the 1980s, settlement claims on liabilities rose and the company posted its first annual loss in 1985. It was subsequently taken over by Banque du Soleil in1989. Manzana, under the new management adopted a back to basics strategy and concentrated on regaining its market share in the property insurance business. Less profitable lines of business were discontinued and the operations at the branch offices were geographically re organized in order to improve the market responsiveness.
Organization: The Company operates through a network of semi-autonomous branch offices. It treats each branch as a profit center and a territory is assigned to each branch. Manzana does not deal directly with the customer, but has a network of more than 2000 independent agents who bring business to the company. Hence, loyalty of the agents and their motivation to push through a Manzana policy is critical to the profitability of the company.
Each branch has underwriting teams to support the agent (typically, 20-25 agents under a team). Agents earn a 25% commission on a new policy and a 7% commission on a renewal. In order to retain experienced employees, Manzana recently kicked off the ‘salary/plus’ scheme. Process Flow:
The time required for different request types are different for each of the activities.
|Request Type |Distribution |Underwriting |Rating |Policy Writing | |RUN |68.5 |43.6 |75.5 |71.0 | |RAP |50.0 |38.0 |64.7 |NA | |RAIN |43.5 |22.6 |65.5 |54.0 | |RERUN |28.0 |18.7 |75.5 |50.1 |
All requests start with the distribution clerk distributing the request for insurance policy (RUN, RAIN or RAP) received from an agent or computer (RERUN) to the respective underwriting team. Distribution also analyses and disseminated published data, researches competitor’s rates and oversees rating. The underwriting team evaluates, selects, classifies and prices the request and then it passes on to the...