Mutual Life Of Canada The Group Client Service Guarantee B Case Solution

2. Overview 

Mutual Life Assurance Company of Canada specialized in employee group-benefit programs, including life, health, rehabilitation, and pension products, and had a customer base of 1.35 million customers. The company had introduced a no questions asked guarantee for its clients to reinforce its mission of providing quality services. However, it faced a dilemma in the case of the Consolidated Group's plan when George Draper, an administrator in the Consolidated’s Hamilton branch, claimed that he could easily take advantage of this policy even if he did not have any service problem. Mutual Life's move to the centralization of the claim processing triggered Draper as he threatened to make claims even if he was slightly dissatisfied. However, Ms. De Silva, regional marketing director of Mutual Group, strongly believed the claims had no real basis. The following report will discuss the action required by De Silva regarding the claim and recommendations concerning the new guarantee.

3. Problems

A major problem faced by the Mutual group was the exploitative exposure it had gained by introducing the no questions asked guarantee. Although the service was aimed to increase the confidence of the customers and emphasize the service quality, but the associated risk was huge. This is because the new guarantee policy may also encourage the prospective or potential clients to make false claims, which would, in turn, cause the business to incur the additional financial expense. Hence, the company needed to act on this immediately, or else it would increase the risk exposure and the liabilities for the company.

Secondly, the policy was not communicated correctly to the clients, which led to an increasing level of confusion on their part. At times, the junior manager in the client's company who would not make their senior managers aware wrongly filed the claims. Later, the claims would be returned to the group with an apology note, which would create an embarrassing situation for all the parties. This needed to be dealt on an immediate basis as such an act would result in distorted data being recorded in the system. Also, in case the claims would go unnoticed from the client’s end, Mutual Group would have paid claims despite not being liable to do so, hence resulting in a financial loss for the company. 

Thirdly, Mutual Group’s claim policy operates such that as soon as a claim is filed, a cheque is immediately dispatched to the client. Only after the cheque is dispatched, does the vice president calls the client to address his concerns, and understand the reason for the claim placed. This places the company in a very vulnerable position and increases the risk of potential abuse of the new policy. This issue needs to be dealt with urgently, or else it would result in offsetting the profitability of the Mutual Group.

4. Causes

Firstly, there is a lack of fit between the task and the people. This is evidenced by the incomplete knowledge of employees regarding the policy terms, making them incompetent in dealing with client queries. Hence, this resulted in confusion for both parties. Lack of employee training to deal with clients was a major cause that resulted in embarrassing incidents as employees could not cater to the concerns of the clients. 

Secondly, there was a lack of fit between organizational structure and tasks as Mr. Brown, the senior VP of the Group Division, was responsible for reviewing all the claims. It was then that these claims were delivered by hand to staff responsible for administering the guarantees based on the divisions they were managing. Because Mr. Brown was solely responsible for giving these documents by hand, it indicates his immense workload. Since the cheque would be dispatched within 3 to 5 days, the relevant employees would get the client details and background information after three weeks and then call the clients to know about their issue and take corrective measures accordingly. However, the time gap exposed the business to risks.