This report is an analysis of the processes involved in the underwriting operations at the Fruitvale branch of Manzana Insurance and attempts to identify the reasons for the inefficient performance and to suggest measures to improve the overall performance of the operations at the branch.
Objectives:
- To minimize the turnaround time
- To reduce the loss rate and the late rate for Reruns
- To ensure an efficient staff allocation scheme
- To identify the reason(s) for the large Turn Around Times (TATs)
- To ensure a competitive TAT with respect to the time proposed by Golden Gate
The calculation of TAT is done with the 95% SCT.
Considering the large standard deviations for times for each process, the SCT is much larger than the mean and this gives a skewed picture of the actual time taken for the process. As per exhibit 3, which considers the scenario for the week ending September 6th, 1991, the Turn Around Time (TAT) is approximately 8.2 days. This calculation of the TAT ignores the overlapping of different stages.
For example, the underwriting department does not start processing the request till the distribution clerk hands over the request to it i. e.the underwriting team is idle when the distribution clerk is busy.
In reality this is not the case and the Underwriting team works in parallel on a request along with the rest of the department and is idle only when no request is pending with it. An analysis of the Gantt chart shows that the Underwriting process seems to be the bottleneck in the whole operation.
It can be seen from the chart that when the underwriting process in progress the Rating and the Policy Writing departments and idle for a long span of time. This is due to the comparatively larger time that the underwriting process takes (3.4 throughput days) when compared to the other departments (Rating – 2.0 and Policy Writing – 2.2). Hence, improvements must be targeted at the Underwriting process.
It can also be seen that the Reruns are given lower priority among all the requests and released just a day before the expiry of original policy. This leads to delay in releasing the renewed policy to the customer and leads to loss of subsequent renewals as agents advise the customers to subscribe to policies of their competitors. The loss rate for Manzana has increased over the last year from 33% to 47% which is very high compared to that of Golden Gate which is 15%.
The overall policy subscription in the three territories is roughly the same but the loss in terms of lost renewals is very high in territory as compared to other regions as can be inferred from exhibits 2 & 7. This can be attributed to a particular region being overloaded at times and hence losing business because of delay in processing renewals. The company policy was to process the policies in the order in which they arrived. The Underwriting team gave top priority to Run and Rap and only after they were finished they would work on Rain and Rerun.
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