OSTR Assignment 3 Manzana Insurance

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Course Name:
Operations Strategy
Assignment Title: OSTR Assignment # 3 Manzana Insurance : Fruitvale Branch Submitted by:
Group Member Name Varun Sayal Srishti Mittal Prithwish Mukherjee Nikhil Samar
PG ID 61210006 61210608 61210185 61210403
Answer 1: Manzana specializes in commercial insurance and offers property and liability insurance along with generating income through investment and miscellaneous specialty lines. Operations Strategy Below is the evaluation analysis of Manzanas operations strategy: Manzana's Operations Strategy Resources Operated through a network of autonomous branch offices (each a separate profit Size and loss center) and a sales force consisting of 2000 independent agents representing Manzana along with other insurers. No capacity constraint Based on the number of agents in each territory the capacity is adjusted. Based on the location and the volume of business generated the number of underwriting Timing teams are assigned to the branch. (Typically each team served 20-25 independent agents) Main assets are branch employees (underwriting teams) paid an hourly salary or Type salary/plus and the agents paid on commission. There is flexibility in terms of expansion or reduction A network of autonomous branch offices in California, Oregon and Washington Location Processes Manzana does not deal directly with public and relies on maintaining close and Supply co-operative relations with independent agents Manzana is not very tech savvy, though it uses computers but still relies on employees while it can automate most processes Based on its performance measures, market drivers and competitor actions and Innovation responses Manzana assesses and improves its processes Lately the backlog of policies for Manzana has increased and the number of new policies and endorsements seems to be stagnating while industry reports moderate Demand growth rates. The turnaround time has increased from three days to more than five days while the competitor is offering one day. each catering to around 2000 independent agents representing Manzana along with other insurers.
Technology
Answer 2: The highest premiums determines the profitability of a given product line. Since new policies generated the highest annual premium revenues, products such as RUNs and RAPs that result in new policies were given a priority at Fruitvale branch. Products such as RAINs and RERUNs were 1
considered after processing RUNs and RAPs as they generated relatively lower annual premium revenues. However requests within each of these priority classes were processed on FIFO (First in and first out basis)
Answer 3: The important measures of operating performance at Fruitvale branch are: Number of new policies (growth rates) Endorsements Number of Renewals Turn round time (TAT) Number of late renewals Renewals loss rate Branch operating expenses Gross premiums
The two major reasons why profits have been deteriorating in the past are: 1. Increase in renewal loss rate 2. Rising turnaround time These are because there are systematic issues such as Prioritization of requests Uneven distribution of workloads High inventory (backlogs) Insufficient capacity in certain departments ( underwriting and distribution staff) Incorrect calculation of turnaround time and process allocation
All these result in strained relations between agents and the firm which is a critical factor in sustaining market share and profitability.
Answer 5: Recommendations 1. The prioritization of RUNs and RAPs over RERUNs and RAINs should be discontinued and FIFO should be enforced without prioritization. The employees incentives which are currently aligned to new policies encouraging them to prioritize RUNs and RAPs should be revised this would help reduce the backlog.
2. The process of RERUNs released to the DCs only on the last day before due date should be changed and they should be given at least 3-5 days float (lead time) This would ensure sufficient time for renewals to reach agents on or before expiry of the policy date 3. The allocation of work among the three underwriting teams can be re-looked based on individual team utilization of the capacity rather than the average one as there might be unbalanced division of work among the teams due to the territorial assignments of agents while one team might be working at peak capacity while the other is idle at the same time and can be utilized for balance and faster processing 4. The policy writing and the rating process can be largely automated and the resources can be re-allocated in bottleneck stages on the process.

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ASSIGNMENT SUBMISSION FORM

Treat this as the first page of your assignment

PG ID 61210006 61210608 61210185 61210403

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