Manzana case
A. Get the Big Picture:
At Manzana the new policies (RUNs) are believed to be more profitable because they “commanded the highest premiums” and also because they considered that costumers would renew their policies anyway so they didn’t need to pay as much attention to the RERUNs. Nevertheless, we consider that these are not the most profitable policies and for instance they should not be given high priority.
Table 1: Manzana Profit for 2nd quarters
Looking at the profits we can see that there has been a gradual decrease in profitability, from a 21.51% in 1989 to -1.36% in 1991.
We made a table including the 2nd quarters or the last 3 years, and we say that there has been an increase of 1.23% in the commission & other expenses over gross premiums, which is related to the policy as agents get 25 % instead of 7%.
While new policies profit increased a 5.9%, the renewal policies decreased the same amount. However, this change has brought as result that of a total of 3900 (including processed within TAT, out TAT and loses) total Renew requests in the 2nd quarter of 1991, there were 926 loses, taking us to 23.74% loses and 23% processed after TAT.
As the RUN and RAP method were being emphasized, there was loss of renewals according to the data provided.
The RAPs are converted into RUNs in 10 days and then 3-5 days in getting completed. The SCT is less for RERUNs. So we can conclude that RERUNs also takes less time to get completed.
Table 2: Volume 2nd Quarter
Table 3: Commission Analysis
The commission paid to agents for completing a RUN and RERUN is 25% and 7% respectively. They get more money if they complete RUNs and RAPs. This encourages them to prioritize their work by addressing RUNs and RAPs first, which just delays the RERUNs further. Even though renewals did not have the same initial value of new policies but losing renewals still represents a significant loss of business. Also, as seen on the above table, the contribution made to gross premiums by
At Manzana the new policies (RUNs) are believed to be more profitable because they “commanded the highest premiums” and also because they considered that costumers would renew their policies anyway so they didn’t need to pay as much attention to the RERUNs. Nevertheless, we consider that these are not the most profitable policies and for instance they should not be given high priority.
Table 1: Manzana Profit for 2nd quarters
Looking at the profits we can see that there has been a gradual decrease in profitability, from a 21.51% in 1989 to -1.36% in 1991.
We made a table including the 2nd quarters or the last 3 years, and we say that there has been an increase of 1.23% in the commission & other expenses over gross premiums, which is related to the policy as agents get 25 % instead of 7%.
While new policies profit increased a 5.9%, the renewal policies decreased the same amount. However, this change has brought as result that of a total of 3900 (including processed within TAT, out TAT and loses) total Renew requests in the 2nd quarter of 1991, there were 926 loses, taking us to 23.74% loses and 23% processed after TAT.
As the RUN and RAP method were being emphasized, there was loss of renewals according to the data provided.
The RAPs are converted into RUNs in 10 days and then 3-5 days in getting completed. The SCT is less for RERUNs. So we can conclude that RERUNs also takes less time to get completed.
Table 2: Volume 2nd Quarter
Table 3: Commission Analysis
The commission paid to agents for completing a RUN and RERUN is 25% and 7% respectively. They get more money if they complete RUNs and RAPs. This encourages them to prioritize their work by addressing RUNs and RAPs first, which just delays the RERUNs further. Even though renewals did not have the same initial value of new policies but losing renewals still represents a significant loss of business. Also, as seen on the above table, the contribution made to gross premiums by