Manzana Insurance - Fruitvale Branch (Abridged)
Harvard Business School
Fruitvale's core management problem is the low performance due to an unacceptable long turnaround times (TAT). Especially because of the late Renewals many of Fruitvale´s customers are turning to its major competitor Golden Gate. The operating performance needs to be improved by eradicating the bottleneck in Underwriting. This will be achieved by restructuring and simplifying the process. Through our solution we are going to achieve a new TAT of 0,518 days (3:53 hours). Thereby we hope to recapture the lost market share and satisfy our customers. In average all daily incoming insurance requests will be processed in an extremely competitive time.
Case for Action
The insurance market, as faced by Fruitvale, has changed significantly during the past decades. New competitors (especially Golden Gate) have entered the market for property insurance and Manzana was bought by Banque du Soleil. The new owner directed the management focus on regaining market share, reduction of operating expenses, discontinuation of less profitable lines and the reorganization on a geographical basis. Fruitvale encounters a significant loss of business due to problems with the management of processing its insurance requests. Long queues and bottlenecks (congestion) are leading to a tremendous slow-down of the underwriting process. The current TAT (Second Quarter 1991) of 6.2 days, being 3.1 times the estimated TAT of its major competitor Golden Gate, increases the pressure on the company significantly. The actual working time of processing one request lies at 4.31 hours for RUNs, 2.87 hours RERUNs and 3.09 hours RAINs and 2.55 hours for RAPs (not processed as RUNs). Hence queues are not processed effectively. Employees are faced with an uneven workload and low capacity utilization. Requests can no longer be processed in the necessary time and a backlog begins to amount. This backlog...