OSTR Assignment 3 Manzana Insurance

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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OSTR Assignment 3 Manzana Insurance