Manzana Fruitvale Case Study
Summary
The main problem of Manzana Fruitvale is a significant loss in profits. It originates in operating performance failures characterized by a total throughput time of 8.2 days. This situation can be improved through structural changes in the underwriting process, reorganization of the incentive structure and redefinition of priorities concerning renewal policies. The total turnaround time (TAT) then decreases to 0.7 days.
Industry
Manzana Insurance is a leading player in the Californian commercial insurance space. The Fruitvale Branch is positioned in property insurance only. In the 1970s Golden Gate Casualty enters the market putting Manzana with fierce price competition and intensive marketing activities under pressure. The underwriting process in the industry usually functions as follows. Independent agents interact directly with the client whereas functional underwriting teams are occupied with the underwriting process. At Manzana a typical policy is passed on by the agent to a distribution clerk (DC) who transfers it to a geographically organized “Underwriting Team” (UT). These Teams evaluate, classify and price the requests, then being passed on to “Rating” (RT) and “Policy Writing” (PW). The key performance indicator is the turnaround time of an insurance policy, which at Fruitvale has increased to 8.2 days recently. Hence, the company constantly loses customers and needs to improve its TAT immediately.
Analysis
Fruitvale’s key problems originate from its Underwriting Process. The turnaround time, especially for renewing policies (RERUNs) is too long which ruins operating performance. Agents complain about high TATs, the percentage late figure is too high and significant renewal business is lost. Out of the 39 requests daily inflow, 22 fall into the new policy (RUN), endorsement (RAIN) or price quote (RAP) category. RERUNs amount to 17. The processing of requests is done through a FIFO system with internal prioritization of RUNs & RAPs over RAINs &
The main problem of Manzana Fruitvale is a significant loss in profits. It originates in operating performance failures characterized by a total throughput time of 8.2 days. This situation can be improved through structural changes in the underwriting process, reorganization of the incentive structure and redefinition of priorities concerning renewal policies. The total turnaround time (TAT) then decreases to 0.7 days.
Industry
Manzana Insurance is a leading player in the Californian commercial insurance space. The Fruitvale Branch is positioned in property insurance only. In the 1970s Golden Gate Casualty enters the market putting Manzana with fierce price competition and intensive marketing activities under pressure. The underwriting process in the industry usually functions as follows. Independent agents interact directly with the client whereas functional underwriting teams are occupied with the underwriting process. At Manzana a typical policy is passed on by the agent to a distribution clerk (DC) who transfers it to a geographically organized “Underwriting Team” (UT). These Teams evaluate, classify and price the requests, then being passed on to “Rating” (RT) and “Policy Writing” (PW). The key performance indicator is the turnaround time of an insurance policy, which at Fruitvale has increased to 8.2 days recently. Hence, the company constantly loses customers and needs to improve its TAT immediately.
Analysis
Fruitvale’s key problems originate from its Underwriting Process. The turnaround time, especially for renewing policies (RERUNs) is too long which ruins operating performance. Agents complain about high TATs, the percentage late figure is too high and significant renewal business is lost. Out of the 39 requests daily inflow, 22 fall into the new policy (RUN), endorsement (RAIN) or price quote (RAP) category. RERUNs amount to 17. The processing of requests is done through a FIFO system with internal prioritization of RUNs & RAPs over RAINs &