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Manzana Insurance: Fruitvale Branch (Abridged)

Date: 26 January 2009

Memorandum

To: Tom Jacobs

The Fruitvale branch has become Manzana’s worst performing branch, and Manzana is being severely outperformed by its competitor, Golden Gate Casualty, in Fruitvale’s territory. The major problems being faced by Manzana are in terms of a high Turn around Time (TAT); large number of late renewals and large back log of policies. The current operations workflow is based on non-optimal distribution of staff among the various departments. Moreover, the departments do not adhere to documented procedures.
ASSUMPTIONS
  1. All analysis has been based on the data for the first 6 months of the year 1991.
  2. The arrival rate at Fruitvalle is assumed to be 39 total requests per day as given in the analysis by Tom Jacobs.
  3. Daily working hours are 7.5 hours. Every month has 20 working days.
ANALYSIS
  1. The TAT of a new request is the time it takes for a request to move from initiation at a distribution clerk until the creation of a new policy. It measures the efficiency of operations of the company and allows the company to maintain certain customer satisfaction levels. It would be better for the firm to start calculating it’s TAT from the time an insurance request originates at any of the company’s agents. Presently, the TAT of a request is calculated by taking the cumulative time required to process all types of requests at each of the resources. A better way would be to calculate the TAT based on time taken to process each type of product category also taking into account the distribution of each of the product categories taken over a specific interval of time (see Exhibit 1). An analysis of the average processing time for a RUN and a RERUN (see Exhibit 2), reveals that processing a new policy (RUN) takes approximately 33% more time than a RERUN. Considering that in 1991, RUNS generated a premium of $6724/258.6min = $26/min and RERUNS generated a premium...