JEFF MANZA MICHAEL SAUDER AND NATHAN WRIGHT Producing Textbook
Declining Profitabilty - Manza Insurance
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Transcript of Declining Profitabilty - Manza Insurance
7/17/2019 Declining Profitabilty - Manza Insurance
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Why have profts been deteriorating over the past several quarters?
The Fruitvale branch o Manzana actually handles property-liability insurance cases
out o which 6! o business is with "roperty cases and #$! deals with liability
case and rest is attributed to %iscellaneous specialty lines& 't had co%e under the
scanner because o declining proftability& (asically it was struggling with the poorlate percentage fgure and a turnaround ti%e o al%ost 6 days whereas its
co%petitor )olden )ate has a turnaround ti%e o # days&
The %ain concern o the Manzana 'nsurance was the declining %ar*et share and
proft and the reasons or the sa%e could be accounted %a+orly by the ollowing ,
points
a. Manzana was struggling with the /igh Turnaround Ti%e though it had
su0cient sta12 even it was oversta1ed in "olicy Writing and 3ating
depart%ent&b. 'ts bac*log o policies had increased since 4552 and the nu%ber o new
policies and endorse%ents appeared to be stagnating whereas others
reported a %oderate growth&c. The renewal loss rate was increasing uncontrollably because o the high
nu%ber o late renewals and this was beco%ing a really pain to the agents&
The other actors7procedure which were contributing to the deterioration o the
co%pany are listed below
Faulty company procedure:
Though the co%pany policy was to use F'F8 syste%2 due to prioritization or 39:s
and 3;"s2 3;':s and 3<39:s were given very low i%portance and the nu%ber olate 3<39:s is increasing consistently over the quarters during the year 455-4554
as shown in the e=hibit 6&
Poor capacity utilization
>ery poor capacity utilization o 3ating and 9nderwriting tea% and the calculation
showing only 6&#! and #&$@! which are contributing to the late processing&
Uneven workload among underwriting team
;%ong underwriting tea% there is uneven distribution o wor*load with Territory 4
9T with capacity utilization o 5#&,$! and Territory , 9T with a capacity utilization
o $&@! and the wor*load here can be distributed properly&
Increasing TAT:
The nu%ber o lost renewals increasing and correspondingly increasing the T;T ro%
@& in 455 to 6&# in 4554ATurnaround ti%e. as shown in e=hibit 6&
7/17/2019 Declining Profitabilty - Manza Insurance
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Loss of business: ;pparently this caused agents to reco%%end other insurance
fr%s based on T;T since the products o1ered by the% is not di1erentiated and this
causing custo%ers to easily switch ro% one fr% to another& This causes Fruitvale to
lose the business&
Increasing Insured losses:
'ncreasing 'nsured losses over the years ro% 455-4554 as in e=hibit is another
reason or its branch proft to change ro% B46 in 4st quarter 455 to post a loss
o B4#4 in the #nd quarter 4554&