Manzana Insurance

Dear John: We definitively have some issues here at Fruitvale Branch, but there are not the ones you think. The main problems that I could identify are the followings: * TAT (Turnaround time) measurement: We are not measuring correctly the TAT. In exhibit #3 shows that the TAT for a particular week is 8. 2 days (0,6+3. 4+2. 0+2. ), but this means that the process is carried as a batch process, every process must be finished in order to go to the next one, and that is not the case (The possibility is very slim (5%)4) Other observation is that the 95% STC (Standard Completion Time) used is too conservative, using the Little’s law, we can estimate a theoretical lead time of 2,1 days ( Inventory (I) = 82 requests, Job’s arrival (W) = 39 request/day, TAT = I/W). The 2,1 days is far from the 6 used by the company, losing client in this way, but it shows that we can improve the TAT number if we redesign the way we measure and handle the TAT.

In our view, the absence of a unified policy for handling the incoming request en each department has made that the turnaround time for RERUNs is excessive. This situation has caused deterioration in the image of our company towards agents, which have directed their customers to other companies increasing the renewal losses from 849 in 1989 to 1. 717 in 1990 (see exhibit 3). Therefore we must: * Improve the turnaround time and the confidence in the service of our company * Implement FIFO policy in all requests for RUN, RAP, RAIN and RERUN equally * Communicate and we re-enchant the agents with our new turnaround time Capacity: We calculate first the capacities of each part of the process (see exhibit 1): Table 1 shows that the main issues are at the distribution and writing sections. The first because is at its limits in capacity and the writing section for the opposite. Although the point made seems correct, if we look at the data for regions. The information in table 2 indicates that the demand for regions is not the same for each one of them, T1 has more demand that the others territories nd that maybe it would be a good idea to use the writers team not assigned by regions but rather as a pool of writers, taking advantage of information technologies, in order to optimize the idles times (Queue theory). Besides, might be advisable to consider having a pool of underwriting and rating team at headquarters to satisfy all the demand from branches. Exhibit 1 Table 1  | Distribution | Underwriting| Rating| Writing| Demand (Jobs/day)| 39,00| 39,00| 39,00| 39,00| Average Time m (Exhibit #4) (min/Jobs)| 40,97| 28,35| 70,39| 54,79| Total Time (min/day)| 1598,01| 1105,76| 2745,10| 1602,60 (75%)| N worker| 4,00| 3,00| 8,00| 5,00|

Available Capacity min/day| 1800,00| 1350,00| 3600,00| 2250,00| Utilization| 89%| 82%| 76%| 71%| Exhibit 2 Table 2| T1| T2| T3| Total| RUNs (originating as RUNs)| 162| 100| 88| 350| RAPs (incl. RAPs converted to RUNs)| 761| 513| 524| 1798| RAINs| 196| 125| 130| 451| RERUNs| 636| 840| 605| 2081| Total Requests| 1755| 1578| 1347| 4680| Exhibit 3 Branch totals| 1989| 1990| 1991 (6 months)| Agents| 79| 76| 76| Policies in force| 5201| 5004| 3946| Renewals Lost| 849| 1717| 926| Gross premiums| 33009| 35446| 17400|

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