Manzana Insurance Case Study

Introduction to our subject for the case study

Manzana Insurance (September 1991) at Fruitvale branch

• It is an Insurance company which deals with providing commercial insurance and personal insurance started in 1902 and was one of the major force to reckon with since 1953
• Deals mainly with the property insurance
• Works on different kinds of policies which include RUN, RAP, RAIN and RERUN (details should be mentioned below)

Analyze current situation

• Except the new policies, there has been a decrease in the other areas of insurance and the TAT has been increasing which is not a good sign
• Employees here are sufficient in number but still boss of the branch is asking for an increase in underwriters
• High Commission (25%) was paid to the agents who have sold the new policies and for the renewal of policies it was 7% commission paid
• Company had a great view to the future by trying to retain its older employees by paying ‘Salary/Plus’ (annual salary plus incentive payment). But the same is not being replicated in the retaining of older customers.
• Even though the renewal policy is being generated 30 days before its anniversary date, we see that there is an increase in number of late renewals and Renewal loss rate
• One reason is the misconception of the employees that new policies generate more income and the second one is that new policies generate more incentive than the renewal ones
• Current order of policies in the company is firstly the RUN then the RAP then the RAIN and finally RERUN
• Company’s policy was to serve the targets on FIFO but on reality grounds we see that RUN and RAP are given priority over the RAIN and RERUN
• Misconception that RERUN handle themselves but handing RERUN takes the similar time as the other policies do and the manager of the Rating department admits it
• Recent performance when compared in last three years for each quarter the profit has been declining and we see a competitor in form of Golden Gate Company which is improving its market share (profits) by having a very less TAT (2day)
• Competitor has guaranteed a one-day TAT so that and has mentioned that 10% premium discount on the event of delay

Manzana is an insurance company founded in 1902, concentrating in the Property Insurance.

• Fruitvale branch of the company is at the bottom of the list after the second quarterly results
• The company is facing tight competitions from their competitor, Golden Gate.
• The percentage of Renewal loss rate has increased drastically compared to last quarter
• Though the company is having enough number of staffs to handle the requests they get daily, the turnaround time is not improving
• New management which took over the company in 1989 is concentrating on rebuilding the share of Manzana in property insurance.
• The company is concentrating more on acquiring new policing and renewal of policies are given the least priority

Objectives and Problems

• They want to put a hold on the increasing ‘renewal loss rate’

Problem: The renewal loss rate has increased by 14% when compared to last year. According to the company policy, clearing the RERUN requests is given the least priority, though manager of the Rating department has clearly stated that RERUNS will take as much time as any other request. This results in the piling up of the RERUN results which eventually leads to the increase in renewal loss rate