Manzana Insurance Case Analysis

Case 2- Manzana Insurance

MGMT 601 –Monday - Spring 2011

Group 6- Amit Deshpande, Alex Coates, Natalie Lopez

Overall Performance of Manzana-Fruitvale:

The Fruitvale branch of Manzana Insurance is struggling right now. “Branch profitability was declining. The backlog policies had increases since 1989, and the number of new policies and endorsements appeared to be stagnating.” To make matters even worse their main competitor, Golden Gate, had no problem taking business away from Manzana while they were struggling. Exhibit 1 shows some of the key metrics for Manzana the past two years and for Golden Gate this year. This shows just how bad of shape Manzana-Fruitvale is in right now. Their renewals are decreasing and they have an extremely high renewals late number (44%). This has led to a very high renewal loss rate (47%) while Golden Gate’s is at just 15%. Even though renewals are the least profitable program for them, losing half of your current business each year is a major problem. Something has to be done to fix this. The current practice at Manzana was to do the new policies (RUNs and RAPs) first. These represented the highest value to the company and employee but doing this has greatly hurt the renewals (RERUNS). When employees get to work in the morning they sift through their work pile for RUNs and RAPs to do first. This practice was not considered company policy but it seems the underwriters were encouraged to do it. In the end, giving priority to new policies pushed renewals to the back of the line and is the main reason that Manzana is seeing ever increasing late and lost renewals. If the company wants the employees to focus on the more profitable new policies they must understand that renewals are going to suffer. Although renewals do not present the same initial value of new policies, losing renewals still represents a significant loss of business.

In addition to the poor renewal numbers, Manzana’s turnaround time is much...