Buad

Harvard Business School

9-692-015

Rev. January 30, 1997

Manzana Insurance - Fruitvale Branch (Abridged)

It was a Monday morning in early September 1991. Bill Pippin had been at Manzana for only

a week, but already he was thinking that perhaps he should have taken a different job. He gazed at a

note on his desk from John Lombard, his boss at the Fruitvale branch: "I'm giving a speech at a

conference on property insurance, so I'll be out of the office until next week. Please give this some

thought while I'm gone." The note was attached to a memo from Tom Jacobs, Manzana's senior vice

president for underwriting operations:

To: John Lombard

From: Tom Jacobs

Subject: Second Quarter Performance

The performance figures on Property Insurance for the second quarter have

just been completed, and Fruitvale is at the bottom of the list again. More important,

Golden Gate is killing us in your territory, and they have just announced a promise

of one-day turnaround time to all agents. If something isn't done immediately to

improve your operating performance, a lot of our agents are going to defect to

Golden Gate, and some of us are going to need new jobs. Here are some of the

numbers:

Manzana-Fruitvale

Golden Gate

This Quarter

This Year

This Quarter

Last Year

This Quarter

(estimated)

New policies

326

278

375

Endorsements

206

235

300

Renewals

1,063

1,253

1,400

6 days

5 days

2 days

Renewals late

44%

20%

NA

Renewal loss rate

47%

33%

15%

Turnaround time (average)

Something has got to be done about this. We're getting lots of complaints from agents about

your turnaround time, your percentage late figure is unacceptable, and we can't afford to lose almost

half of our renewal business every year.

John, ever since we eliminated an underwriting team in 1990, you've been

saying that you need more underwriters. But when we look at the volume of

Christopher Loch and David...