Essay About 2016Manzana’S Position And Golden Gate Casualty

Manzana Insurance Fruitvale Branch
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Syndicate AssignmentManzana Insurance Fruitvale BranchOperations01 June, 2016Manzana’s Position in the Insurance IndustryManzana has a history of seeing opportunity and seizing it. Manzana has grown through acquisition. Manzanas main competition is Golden Gate Casualty. They beat Manzana on both price and performance. Golden Gate tied with Manzana for first place in the property insurance market in 1988. By 1991, Golden Gate announced they could guarantee turnaround time (TAT) of one day. If they fail to reach that benchmark, they offer a 10% premium discount. Manzana must at least match that promise to stay competitive in this market.The current TAT for request processing has bloated to five or more days at a time. This report will recommend a number of strategies to improve the system in operational efficiencies, measurement and service. Manzana has an opportunity to increase their business through decreasing their TAT, adjusting staff incentives and delighting their customers. The acquisition of Manzana by Banque du Soleil has helped. There was a restructure that resulted in a leaner company. Underwriting standards have tightened, operating expense has reduced and this has resulted in a regain of market share. After the restructure, they are now better geared toward the property liability insurance market. Manzana now specialise in commercial insurance rather than personal insurance. That has pitted them against Golden Gate. For commercial insurance, the revenue breakdown of Manzana is:CategoryProportion of Manzana RevenueProperty Insurance65%Liability Insurance20%Investment Income and Miscellaneous Specialty Lines15%Figure 1: Manzana revenue by product categoryAs illustrated in fig. 1, liability insurance is only 20% of Manzanas revenue. The liability insurance crisis of the 1980s saw huge payouts to customers. That meant reduced profitability and a low proportion of resources allocated. The Fruitvale branch of Manzana increased the proportion of resources working on property insurance. This was to avoid taking on the high risk of ​payouts that would threaten the branchs profitability and meant it could stay open.Analysis of ManzanaIn order to take on the challenge that Golden Gate has thrown down, Manzana must analyse their systems and performance. We will make some recommendations based on an analysis of Manzana’s Key Performance Indicators – measurement and incentivesCost structureBottlenecksAssumptionsThis analysis includes these key assumptions:The exit time from the processing of a previous step becomes the arrival time of the next step, e.g. CVp (Distribution) = CVa (Underwriting)[pic 1]The arrival variability at the entry is nil: Arrival of policies to the distribution appears to be perfectly random with no discernible patterns of peakingTo complete this analysis we have taken the mean and standard deviation from the Policy Processing Times by Department in 1986See Figure 2 and 3 for assumptions based on Manzana’s performanceTime AssumptionsMinutes in an hour60.0Hours in a working day7.5Working days in a week5.0Weeks in a month4.0Days in six months120.0Figure 2, assumptions used in time-based calculationsResource AssumptionsRating clerks4Distribution clerks8Writing clerks5Territory 1 underwriter1Territory 2 underwriter1Territory 3 underwriter1Pooled underwriters3Figure 3, assumptions used in resource-based calculationsKey Performance Indicators (KPIs)The KPIs for Manzana Fruitvale branch are benchmarked against targets for the current quarter, the current quarter vs. the previous year and the current quarter for Golden Gate. They are:Number of new policiesNumber of endorsementsNumber of renewalsTAT (days)Renewals late (%)Renewals loss rate (%)Management signal to staff what is important to them. At present, it is: TAT, the percentage of late renewals and the percentage of renewals lost. The announcement by Golden Gate of the one-day TAT and 10% discount if it is not met has increased the pressure on these KPIs.The targets for Manzanas Fruitvale branch were not provided. Performance relative to Golden Gate is substandard, as shown below in Figure 4 for the current quarter:MetricManzanaGolden GateAverage TAT6 days2 daysRenewals late44%-Renewal loss rate47%15%Figure 4. Performance of Manzana relative to Golden GateThe absence of late renewals by Golden Gate is telling – that represents a yawning gap to Manzanas 44%. Its a clear indicator as to why Manzana loses close to half of the renewals segment of its business every year. These losses may also be attributed to the incentive of staff to work on new policies rather than renewals. The workflow is not optimised, with staff working in silos rather than pooling resources. These issues are reflected in Manzana’s profit and loss statement.