Manzana Insurance: Fruitvale Branch

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Question 1. How important is turnaround time (TAT) in this business?

In summary: The turnaround time (TAT) in the insurance business is very important. This because of the following arguments:

- The most important factor to the agents in the insurance markets is the level of service provided. One of the most important aspects that determine the service level is the speed of handling the requests (TAT).

- In addition, the factors that drive profitability in the industry are related to the needs of the customers: speed. Therefore, the TAT is also of great importance for the profitability in the industry. One additional comment, by optimizing the TAT the cost of handling requests is most likely to decrease what will increase profitability as well.

- The factors on which the industry competes has shifted from price and commissions for agents towards the service level provided. Again, one of the most important aspects of the service level is speed and therefore TAT.

Finally, a basis analysis suggests that the increase in TAT is related to the increase in percentage loss rate. What is strongly related to the decreasing profitability of Manzana. In summary: the TAT is very important in this industry because of the needs of the agents and end-customers, the aspects of competition, the factors that drive profitability and the expected relation between the percentage loss rate and the TAT.

What factors are important to agents and what factors are important to their 
customers (i.e. the end-consumers)?

In an industry where companies are highly reliable on external agents for their sales and where these same agents favor organizations that offer relatively faster Turn around times (TAT) the TAT is very important for the competitive advantage in this business.

To elaborate on the importance of the TAT: as described above, the agents are in favor of companies who offer relatively faster turnaround times. Part of their motivation is probably based on the importance of the competitive factor “speed” for the end-customer. The customer would probably prefer a low cost insurance, however, they are probably also looking for a quick offering, after filing a request.

In summary, the importance of TAT in this industry is high because of the important of “speed” of the communication of information (prices) and the finalizing of the proposals, in the competitive environment.

What factors drive profitability in this business?

In addition to the answer at question one, the profitability in the insurance business In this particular case is mainly based on the factor speed. This because of the importance that the individual agents value, on the on time and quick response to requests.

In addition, because of the increased competition and more general product offering the organizations were not any longer able to compete on price towards the agents. This resulted in the agents comparing companies on their level of service. On of the service aspect was speed and reaction time.

In summary: the main factor that drives profitably in the business is: speed.

How does Manzana compeet with Golden Gate?

As mentioned in the previous answers the marketing profitability is depended on the factor ‘speed’. Moreover, in previous years Manzana was market leader in several insurance areas. However, currently the competition: Golden Gate is “killing Manzana in its own territory”.

In the current market situation Manzana and GoldenGate compeet on the operation strategy ‘Speed’. As a result of the shift from competition based on prices towards service in the form of speed, Manzana is losing sales rapidly. As stated in the case: “A lot of agents are going to defect to Golden gate”

This is mainly the case because of the competitive advantage that Golden Gate created by claiming a one day TAT time. In comparrision with Manza, of which the TAT has increase from 3 tot 5 day’s Golden Gate has created a relatively...
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