Founded in 1902 in California, Manzana Insurance specialized in commercial insurance, with property insurance, in 1991, making up 65% of its revenues, liability insurance 20%, and investment income and miscellaneous specialty lines constituting the remainder.
Manzana operated through a network of relatively autonomous branch offices in 3 states of the United States of America - California, Oregon, and Washington. Each branch was treated as a separate profit and loss center. Its sales force comprised about 2,000 independent agents who represented Manzana and other competing insurers. Consequently, there were no exclusive Manzana agents.
Manzana Insurance, founded in 1902, had a profitable home and commercial property insurance business for several decades. The company's performance started taking a hit in early 1970s. This was due to emergence of a nimble competitor, Goldengate, and high interest rate regime.
The case is concerned with the performance of a branch, by name Fruitvale, which has been consistently losing business to its archrival Goldengate in its territory.
By mid-1991, Goldengate had performed much better than Manzana's Fruitvale branch on every count and this resulted in memo being issued by the senior vice-president at Manzana. The Fruitvale branch performed badly on various measures like total number of requests for New policies, endorsements, and renewals processed, very high turnaround time resulting in late renewals and increased renewal loss rate.
The management was of the view that the branch was adequately staffed, overstaffed in some cases, and dismissed staffing as a cause for the dismal performance. The top management wanted some urgent action on Fruitvale's part and provided them two weeks to come up with an action plan.
To identify and resolve operational inefficiencies in the processing of various underwriting requests, which have adversely impacted the branch profitability.
To identify and remove/ mitigate the bottlenecks in policy processing...