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7/31/2019 OSTR Assignment 3 Manzana Insurance
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ASSIGNMENT SUBMISSION FORM
Treat this as the first page of your assignment
Course Name: Operations Strategy
Assignment Title: OSTR Assignment # 3 Manzana Insurance : Fruitvale Branch
Submitted by:
Group Member Name PG IDVarun Sayal 61210006Srishti Mittal 61210608
Prithwish Mukherjee 61210185Nikhil Samar 61210403
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Answer 1:
Manzana specializes in commercial insurance and offers property and liability insurance along withgenerating income through investment and miscellaneous specialty lines.
Operations Strategy
Below is the evaluation analysis of Manzana s operations strategy :
Manzana's Operations Strategy
Resources
Size
Operated through a network of autonomous branch offices (each a separate profit
and loss center) and a sales force consisting of 2000 independent agents
representing Manzana along with other insurers. No capacity constraint
Timing
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
teams are assigned to the branch. (Typically each team served 20-25 independentagents)
Type
Main assets are branch employees (underwriting teams) paid an hourly salary or
salary/plus and the agents paid on commission. There is flexibility in terms of
expansion or reduction
Location
A network of autonomous branch offices in California, Oregon and Washington
each catering to around 2000 independent agents representing Manzana along
with other insurers.
Processes
SupplyManzana does not deal directly with public and relies on maintaining close and
co-operative relations with independent agents
Technology
Manzana is not very tech savvy, though it uses computers but still relies onemployees while it can automate most processes
InnovationBased on its performance measures, market drivers and competitor actions and
responses Manzana assesses and improves its processes
Demand
Lately the backlog of policies for Manzana has increased and the number of newpolicies and endorsements seems to be stagnating while industry reports moderate
growth rates. The turnaround time has increased from three days to more than five
days while the competitor is offering one day.
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
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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.
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