About the Case

The Fruitvale Branch of Manzana Insurance is struggling to compete in California's rocky insurance industry. Fruitvale's manager, John Lombard, must decide how to respond to a local competitor's promise of a one-day turnaround time for new policy requests, or face the likelihood of losing additional agents and subsequent business.

The case deals with performance assessment and improvement of a service operation process in the insurance industry, a market that is highly sensitive to response time.

What are the problems that the Fruitvale Branch is facing? What are the causes of these problems?

PROBLEMS
Total time required to completely process the insurance request is known as TAT. Golden Gate is the key competitor & has announced TAT of one day, which can add serious competition

High Turnaround Time

Loss of Renewals & Decreased Profitability

In past, 44% of renewals processed late & 47% of renewals lost. Company gives very short notice for RERUNs to agents, they tend to recommend other insurance agencies to clients. The inability of the company to provide timely processing of RERUNs is causing the loss of a large volume of valuable customer base, thus reducing its revenue & profitability The branch reported a loss of $174,000 and $121,000 during the first quarters of 1991

Analyze current processes used to handle various types of service requests. What is your assessment of the rules used to assign priorities in Fruitvale operations? Can you identify the problems in the way Manzana is calculating turnaround time in Exhibit 3 of the case?

Operating Activities Exhibit 2

Capacity Utilization of Underwriting teams

Underwriting Team 1
RERUNs Total Territory 1 162 761 196 636 1755 Mean Time 43.6 38 22.6 18.7 Total Time 7063.2 28918 4429.6 11893.2 52304 Average Processing Time per request 29.80 Total Requests per day 14.63 Average Time utilized per day 435.87 Capacity Utilization (total of 450 mins-7.5*60) 96.86% RUNs RAPs RAINs

Underwriting Team 2
RERUNs Total Territory 1 100 513 125 840 1578 Mean Time 43.6 38 22.6 18.7 Total Time 4360 19494 2825 15708 42387 Average Processing Time per request 26.86 Total Requests per day 13.15 Average Time utilized per day 353.23 Capacity Utilization (total of 450 mins-7.5*60) 78.49% RUNs RAPs RAINs

Underwriting Team 3
RERUNs Total Territory 1 88 524 130 605 1347 Mean Time 43.6 38 22.6 18.7 Total Time 3836.8 19912 2938 11313.5 38000.3 Average Processing Time per request 28.21 Total Requests per day 11.23 Average Time utilized per day 316.67 Capacity Utilization (total of 450 mins-7.5*60) 70.37% RUNs RAPs RAINs

Expected profit from Renewal policies

1990 1991 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr Renewal Loss 400 414 436 467 429 497 Renewal Premium Lost 2252 2231 2455 2629 2415 2798 Commision Expense at 15% 169 175 184 197 181 210 Expected Profit 2083 2156 2271 2432 2234 2588 * Expected profit and commission expense calculated considering 50% additional conversion of renewal premium lost

THANK YOU..