Policy writing



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The policy-writing department on the other hand would handle the simple jobs before tackling the longer or more difficult requests. All these lead to improper scheduling and backlogs 2. High Renewal Loss rate: The number of Renewals lost in the first six months of 1991 is 403 out of total RERUNs of 636. The percentage of Renewals lost is very high if compared to the renewals lost in Territory 2 and Territory 2. This is primarily due to the “tickler” based system in which the renewal processing starts on the anniversary date of the original policy issuance.

One more reason is that the RERUNs are given low priority by various departments. 3. Calculation of TAT: Turn Around time for a new request (TAT) has been calculated assuming a sequential process. The time taken in each of the process viz Distribution, Underwriting, Rating and Policy Writing has been added to arrive at TAT. The high value of calculated TAT deters the agents from referring Manzana to customers. Golden Gate, a competitor of Manzana had guaranteed TAT of one working day 4. Large Backlog of RERUNs: This happens because the RERUNs are thought to take care of themselves.

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The Underwriting department gives low priority to RERUNs. New policies bring more profits and hence are given high priority. This creates a backlog of RERUNs in the system and the delay in system. The delay in RERUNs give an incentive for the agents to switch the old policy from Manzana as a new Policy in Golden Gate or some other competitor 5. Low conversion of RAPs to RUNs: The conversion rate of RAP to RUN is 79 out of 513 which is approximately 15%. This implies lot of loss for the company and loss of customers for the company Proposals for Improvement 1.

A pure FIFO system: The current system is prioritised in such a manner as to give a lower priority to the RERUNs. When the FIFO system is followed without any priorities assigned it, is seen that the delays for RERUNs are reduced. Since it is the delay in the RERUNs that resulted in almost all of the delay that occurred in the previous system eliminating the priorities in the FIFO system will reduce the delays in RERUNs 2. Relocating personnel from Rating to Underwriting: From the Gantt chart it is apparent that the underwriting team lacks capacity while the rating and the policy writing team have idle capacity.

To improve the efficiency of the operations some personnel could be shifted from the Rating and the Policy Departments to the Underwriting departments. The work at the Rating and the Policy Writing department is turning more mechanical due to the introduction of computers in the process. The relocation of personnel from these departments to the Underwriting department should not affect the performance of these departments as they have idle capacity. Moreover the loss of manpower can be compensated by infusion by automation of a major part of the process. Two members from the Rating team need to be trained and a new underwriter team formed.

The new systems decreases the TAT from 3. 45 to 2. 75. The calculations and the procedure used to calculate TAT is shown in appendices I and II 3. Revision of SCT data: The mean time that Mr. Tom Jacobs has used is no longer valid as the true processing time is now around the SCT. The employees seem to have developed a habit of completing the work in this acceptable time frame. A significant improvement in turnaround time can be achieved by redefining the SCT to the present day norm. A challenging SCT reduction of 25% can enable us to achieve even a TAT of 1.

5 days as shown in exhibit 6 4. Decreasing the due date for RERUNs: The delay in RERUNs, which is currently at unacceptable levels, can be reduced if the policy for RERUNs is changed slightly. Currently the due date for the RERUNs is exactly the anniversary of policy issuance. This can be reduced to 2 days before the same. This will reduce our ability of appraisal on the most up to date information, but the benefit of decreased late rate will bring down the RERUN loss rate, which is the major reason for the loss of the renewals that has been witnessed in the recent past.

Since the TAT is reduced to approximately 2 days by using a pure FIFO method, we can effectively reduce the renewals late to zero. Thus the renewal loss rate can be reduced to the industry average of 15% APPENDIX II Calculation of TAT The entire process is considered as a Batch process with a batch size of 1. In other words, each request be it RUN, RAP, RAIN or RERUN is passed on to the next stage as soon as the processing is over at a stage. As a result of this recalculation the TAT comes out to be 2. 75 days.

This calculation has been done taking the week ending September 6, 1991 as the base. It is suggested that the same method be followed every week to calculate the TAT. This contrasts with 8. 2 days as per the current calculation because in the current calculation it is assumed that the process is done serially i. e. only after all the processing at a particular stage is over are the requests passed on to the next stage. The assumption that the other stages are idle while processing happens at any one stage is invalid valid as simultaneous processing can be done.

APPENDIX III GANTT CHART APPENDIX IV GANTT CHART Pending work at DC Pending work at UT Pending work at RT Pending work at PW TAT = 2. 75 DAYS APPENDIX V Territory wise distribution of Policy subscription and losses (for 1991).

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