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Manzana Insurance: Fruitvale Branch Case Solution

Solution Id Length Case Author Case Publisher
830 1824 Words (7 Pages) Steven C. Wheelwright Harvard Business School : 692015
This solution includes: A Word File A Word File

Manzana Insurance, according to the performance figures on Property Insurance for the second quarter, has acquired last place on the list again. It is working on code of giving precedence to, what is more, profitable i.e. RUN and RAP. And in doing so it has caught itself in a situation where the average time for renewal has increased drastically, resulting in late and loss of renewals. According to figures provided, about 44% of the renewals are late where as renewal loss rate is 47%, which is very high and is resulting in moribund profit due to dissatisfaction and eventual loss of customers (Martins).

The company apparently uses FIFO, but most underwriters scan out of RUN and RAPS, and when done, they start doing RAINS AND RERUNS. And, as a result, many renewals are lost (47%) while others are late (44%). On the other hand, their biggest competitor, Golden Gate, is performing much better with Renewal loss rate of 15% only. Because of that, the independent agents started to refer Golden Gate to customers resulting in losses for the company.

Another problem faced by Manzana insurance is the distribution of work load, it is stated that work is so unevenly distributed that, for one day an underwriter might get a push beyond limits and the very next week he may be idle. In addition to this, branch is also overstaffed in rating and policy writing. This has added into inefficiency and blockage of requests for RERUNS, as it requires one department to complete task for other to start working on it. Because of these blockages requests are left out and eventual loss of customer.

Following questions are answered in this case study solution:

  1. What operational problems is Mazana facing? How might they be connected to the deteriorating profits experienced over the past year?

  2. What are some possible alternatives for improving Manzana's performance? How might these specifically help to eliminate the causes of the problems facing Manazana? 

Manzana Insurance Fruitvale Branch Case Analysis

Mentioned issues, coupled together to give birth to increase in turnaround time i.e. the time required to complete a cycle or policy and then issue that to an appropriate agent(Business Dictionary). The average turnaround has jumped from three days to more than five days (6 days on average). On the other hand, Golden Gate has turnaround time of two days and in order to gain more market share it has announced turnaround time of one day. And because of their superior performance and new promise to capture market share, agents started to defect to Golden Gate.

In addition to this, amount of work that can be performed by department i.e. total capacity is not fully utilized and is also uneven, so it clearly reflects departments to be in efficient. Now we can see that rating and policy writing departments are most inefficient and over staffed. This can be related as one of the major cause for not only increasing the turnaround time, which has almost doubled, but also problems like not following standards (FIFO) properly and others. This is causing few departments and territories to be over burdened and unable to carry job on proper time. On the other hand, at the same time, at other departments, employees are idle. This is causing great stretch for few to be unable to handle the burden, so Manzana is losing business. Then attachment of bonus to RAP and RUN caused employees to scan for them first. This way, employees are earning for themselves not for business, as they are losing more on profits for organization and gaining on bonuses.


Review and distribution



Policy writing

Avg. time required

26.7 Hours.

20 Hours.

46.7 Hours.

27.5 Hours.

Capacity available

30 Hours.

22.5 Hours.

60 Hours.

37.5 Hours.

Capacity utilized

89% Approx.

91% Approx.

80% Approx.

73% Approx.

Lastly, the SCT for each processing step is based on a survey done in 1986, with a confidence interval of 95%, meaning that only 5% of the request will take more than allotted time. This apparently seems to be outdated and resulting in erroneous distribution of workload and time to be consumed. This old method show exaggerated figures and, as a result, deployment and strategies are based on erroneous figures causing troubles for the company to get going smoothly.

The problems faced by Manzana Insurance are chained together. Each one is leading onto another, and accumulating to cause huge losses for the company. Necessary steps must be taken to resolve these issues or else they would not be able to face super performance and moves of Golden Gates.

What are some possible alternatives for improving Manzana's performance? How might these specifically help to eliminate the causes of the problems facing Manazana? 

The problems that are faced by Manzana Insurance are linked like a chain, coupled together adding loads of troubles, resulting, loss of profit for the company. But a chain is as strong as its weakest link. So it’s never late to take necessary actions to break these shackles to get out of trouble.

Firstly, as the company uses FIFO, it should strictly adhere to it. As we discussed despite using FIFO the underwriters scans for the RUN and RAP and after completing they precede with RAIN and RERUN. And because of that the company is facing loss of business. By adhering to FIFO, the requests that were forgone previously will be carried upon. In order to have a sustainable business it’s most crucial to keep previous customers as it costs more to get a new customer. A happy customer brings in more business and other customers. So it’s wise to pay attention to RERUN, that will be more profitable, than going for more incentive one (Steverson and Alfino).

Rating and the policy departments are overstaffed and at the same time are inefficient. It was estimated approx. 66% of the turnaround time is consumed within these two departments. Also, it’s understaffed at the Review and Distribution. So, Manaza Insurance at this stage needs to remove few employees from rating and policy department to rating and distribution department.  In addition to this, the Rating and the Policy departments’, needs to be automated. As the SCT used for finding out TAT are based on 1986 survey. And it portrays the increasing figures about turnaround time.

As a result of distribution of work load and workforce among department, the average turnaround time will decrease. And allocation of employees to understaffed departments will allow them to work more efficiently further reducing the turnaround. Furthermore, system automation will save much of the time consumed specially in rating and policy departments. There is heaps of room for automation because the case and performance hints that the work is performed manually in these departments. SCT, not only neglects the 5% time consuming request but also consider that other department will start  working after first department is done with its job (Psycleia).

Manzana Insurance should be flexible with time and processing of RERUNS as they are not released to Distribution clerk until the last day before the due date. So Rick Ramirez’s views should seriously be taken in consideration and number of days for RERUNS to be issued to Distribution clerk should be increased.

Causing an increase in the days prior to the due date for RERUNS to be released to distribution clerk will make sure that there is enough time for the relevant department to precede the request. The underwriter team has been erroneous in estimating the time required for RERUNS, so this results in blockage at rating department.

Employees’ incentive system should be considered. The priority to processing RAN and RAP is done because the incentives systems are linked with it.
Priority is given to RAN and RAP because of bonuses being attached to it. Out 40 daily requests 17 fall in the category of RERUN. Instead of giving incentives on the basis of RAN and RAP, incentives should be given on the basis of time consumed for the turnaround time and strict adherence to standards. This will cause employees to work efficiently and effectively. And will put focus on what needs to be taken care of instead of building own empires (Makovsky).

Assignment 2: Memo

To: Tom Jacobs

From: Bill Pippin

Subject: Second Quarter Performance

I am well aware and concerned about performance of Manzana-Fruitvale. In addition to this, I am also keeping an eye on Golden Gate moves. So I have thoroughly analyzed the current situation and identified the reasons for deteriorating profits. In my views, certain changes are to be made to improve to our current business practices.


Review and distribution



Policy writing

Avg. time required
(40 requests)

26.7 Hours

20 Hours

46.7 Hours

27.5 Hours

Avg, time required (39 requests)

(39 * 40) / 60 =




Capacity available

30 Hours

22.5 Hours

60 Hours

37.5 Hours

Capacity utilized

89% Approx.

91% Approx.

80% Approx.

73% Approx.

Capacity utilized using 39 requests





You are right about the overstaffing in rating and policy writing department. And we have also identified that capacity utilization is distributed unevenly. So we should transfer few of employees from Rating and Policy writing department to Review and Distribution. This will distribute the work load evenly. If we further analyze into territorial distribution of work load we further can summarize that territory has the lowest number of agents while the RUNS (274) and RAPS and renewal losses are highest. This suggests that territory stretched to the maximum. While, in territory 3, we have the lowest number or RUNS generated and Renewals lost is less than that of territory 1. So we have to make this workload even by shifting of employees from. Below is capacity utilization using weighted average and this also shows we have uneven work load within departments (Rishi).

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