Team 4 Praveen Khanna , Raajesh Khumar , Vinesh , Vivek

Problem Definition: This case study focuses on the operational inefficiencies of the Fruitvale branch of Manzana Insurance Company. The major areas of concern includes: high Turnaround time (TAT), the turnaround time is the total time taken to process a request. At present Manzana s TAT is around six days compared to one day TAT of its major competitor Golden Gate Insurance firm. To reduce the TAT time to less than one day at par with its competitor, the current bottleneck process in the system is identified and the work flow is balanced. The inappropriate work force distribution at Manzana makes some workers to be idle and others being stretched to work, making the system inefficient. There is significant proportion of policies which are being renewed late, this is primarily because the policies which are required to be renewed (RERUN) are being intimated to the customer only in the last day which results in loss of business. The issue is addressed by notifying the customers 30 days prior to the due date giving sufficient time to the customer to renew the policy. The various departments in Manzana have different priorities resulting in backlog of policies. The system is prioritized based on the profit generation of various processes, with priority given in the following order RUNs, RAPs, RAINs and RERUNs. The salary plus program offered to retain workers in Manzana is not aligned towards the profitability of the company. Hence the structure should be aligned more towards the profitability and not on the type of policies.


The present operating condition is considered to be the base case and the simulation results depicted its TAT to be 4. Also.Team 4 Praveen Khanna . To reduce this high loss rate the RERUN operation along with RUNs was given highest priority 2 . Vinesh . Hence it is highly important for Manzana to implement some of the above suggestions so that they can stay in business. Vivek As Manzana faces a stiff competition. they were given the lowest priority which had resulted in renewal loss rate of 47%. RAPs. (Refer appendix Table 1) The profit from the operations was around 26. there are chances that they might lose business if the agents tend to look out to do more business with Golden Gate Insurance. but since the profit margin of RUNs is higher when compared to RERUNs. still it is incompetent when compared to its competitor s TAT. Though there is a significant decrease in the TAT. The processes were simulated with six different cases and the results were compared to settle on the optimal case (refer appendix Model 1). RERUNs are the highest number of requests that come into the system. the TAT was reduced from 4. RERUNs were given least priority. Raajesh Khumar .8 days. Analysis: The process flow for the operations at Fruitvale branch of Manzana was analyzed using the simulation software Extend. In the second case the current system was modified with equal priority given to RUNs. RAINs and RERUNs.7 million dollars and its maximum queue length was 83 requests. the salary plus payment structure for the employees at Manzana favored processing of new requests. The two other cases were simulated with change in priorities alone.8 days to 1.94 days. here underwriting is the bottleneck operation with utilization of 99%.

94 days to 1. To balance the work flow the resources were shifted from policy writing to form another underwriting team in territory 1.2 days. The agent s commission structure of 25% per policy for RUNs and 7% per policy for RERUNs has a significant impact on the profitability of Manzana. If this TAT is not reduced the agents might slowly turn towards its competitor. Vinesh . Vivek and second priority to other two processes (refer appendix from 1. The profit calculation has been made by considering 100 requests of each type. increase in profit by $2. Golden Gate. Model 2).Team 4 Praveen Khanna . This reduced the TAT to 0. The reduction in TAT is highly important for Manzana to stay in the business and retain its market share. Raajesh Khumar . The TAT was reduced In all the above three cases the bottleneck was the underwriting process at territory 1 and the policy writing team was underutilized. inappropriate work force distribution and backlog of policy requests. The calculations depict that out of different policy types RERUNs has the highest profitability. Conclusion and Recommendations: The key problems identified in the Fruitvale branch of Manzana are high TAT. Though RUNs generate highest revenue per policy the higher commission given to agents makes RUNs less profitable when compared to RERUNs.9 million and reduction of lost orders from 3035 requests in the base case to 2455 requests (Refer appendix Table 2). This presents an optimal case with TAT less than a day.67 days with maximum queue length of 8 requests. (Refer appendix . The above problems have been addressed by changing the priorities and shifting of resources to the bottleneck operation. The TAT has been reduced to less than a day which would make Manzana at par with its 3 .Table 3).

Raajesh Khumar . the optimal case suggested above would result in higher profits.Team 4 Praveen Khanna . A detailed plan is certainly necessary for a successful implementation of the suggestions. by assigning equal priority to RUNs and RERUNs and shifting of resources the problem of backlogging. inappropriate work force distribution has been solved. however the case study does not expose to other details like wages paid to workers and cost of overtime. less number of orders lost. Vivek competitor and hence it would be assured of its market share. a better clarity would be obtained before implementing these suggestions. balanced work flow and no implementation cost making Manzana a fierce competitor in the insurance market. The suggestions involve only shifting of existing resources and hence there is no implementation cost involved. The number of requests for RERUNs has been high compared to the other requests. Though some of the other solutions would also reduce the TAT. Vinesh . 4 . would entertain them to bring more RERUNs and hence increase the revenues for Manzana. an increase in the commission rate to the agents from the existing rate of 7% for renewal requests. Once these additional information are collected. high TAT. In addition to the changes suggested.

Team 4 Praveen Khanna .8 Underwriting 1. Vivek Appendix: Table 1: MODEL PRIORITIES TAT ( days ) BOTTLENECK RUNs 1 RAPs 2 1 RAINs -3 RERUNs -4 RUNs 1 RAPs 1 2 RAINs -1 RERUNs -1 RUNs 1 RAPs 2 3 RAINs -2 RERUNs -1 RUNs 1 Shift in resources RAPs 2 ( Optimal Case ) RAINs -2 RERUNs -1 4.94 Underwriting 1.20 Underwriting 0. Raajesh Khumar .67 Distribution 5 . Vinesh .

Team 4 Praveen Khanna . Vinesh . Raajesh Khumar .8 TOTAL 6306033.4 532248.9 TOTAL PROFIT $ 30931264.8 TOTAL 6142946.0 6 .5 538746.0 590. Vivek Table 2: PROFIT CALCULATION FOR BASE CASE REQUEST TYPES RUNS RAINS RERUN NUMBER 1276 912 4214 GROSS PROFIT PER POLICY 4942.7 5715.7 5715.7 24086483.9 TOTAL PROFIT $ 33916814.0 590.1 PROFIT CALCULATION FOR OPTIMAL CASE (AFTER SHIFT IN RESOURCES ) REQUEST TYPES RUNS RAINS RERUN NUMBER 1243 901 4766 GROSS PROFIT PER POLICY 4942.7 27241618.

11 620508.56 PROFIT ($) 499693.63 6205.00 43435.08 TOTAL PREMIUM ($) 666257. Raajesh Khumar .58 645. Vivek Table 3: CALCULATION FOR MOST PROFITABLE TYPE OF REQUEST REQUEST TYPES # REQUESTS 100 100 100 PREMIUM PER POLICY ( $ ) 6662.25 64563.67 64563.44 RUNs RAINs RERUNs 7 .00 COMMISSION FOR AGENT ( $ ) 166564.42 0.Team 4 Praveen Khanna .11 577072. Vinesh .

Vinesh .Team 4 Praveen Khanna . Raajesh Khumar . Vivek 8 Model 1: Base case .

Vinesh . Vivek Model 2: Optimal case (After shift in resources) 9 . Raajesh Khumar .Team 4 Praveen Khanna .

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