sample phase 2

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Systems Analysis and Design ProjectStage 2Logical Dataflow Diagrams:

Existing and Proposed Workflow

Based on Harvard Business School case 9-692-015Manzana Insurance Fruitvale Branch

Presented to

Professor Michael PalleyMGT 772 SB

Analysis and Development of Information Systems

By Team 3:xxxxx xxxxxxxxxx xxxxxxxxxx xxxxxxxxxx xxxxx

February 23, 2004


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TEAM 3 MGT 772SBSystems Analysis and Design Project STAGE 2 Analysis and Development of Information Systems

Submission date: 2/23/2004 Professor Michael Palley

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Table of Contents

SYSTEM OVERVIEW............................................................................................................................................... 4

DESCRIPTION........................................................................................................................................................... 4POLICY REQUEST TYPES ......................................................................................................................................... 4BACKGROUND ......................................................................................................................................................... 4CURRENT ORGANIZATIONAL PROBLEMS AND GOALS FOR THE NEW SYSTEM ......................................................... 4

EXISTING SYSTEM ................................................................................................................................................. 6

DATAFLOW DIAGRAMS ........................................................................................................................................... 6Existing System: Context Diagram Insurance Request Processing System........... ........... ............ ........... ....... 6Existing System: Parent Diagram Insurance Request Processing System................ ........... ............ ........... ..... 7

Existing System: Diagram 1 Prepare Request ................................................................................................ 8Existing System: Diagram 2 Underwrite Request......... ........... ........... ........... ........... ........... ........... .......... ...... 9Existing System: Diagram 3 Rate Request ................................................................................................... 10Existing System: Diagram 4 Issue Policy .......... ........... ........... ........... ........... ........... ........... ........... .......... .... 11

PROPOSED SYSTEM ............................................................................................................................................. 12

DATAFLOW DIAGRAMS ......................................................................................................................................... 12Proposed System: Context Diagram - Insurance Request Processing System .......... ........... .......... ........... ....... 12Proposed System: Parent Diagram Insurance Request Processing System........... .......... .......... ........... ......... 13Proposed System: Diagram 1 Prepare Request.......... .......... .......... ........... .......... .......... .......... ........... .......... . 14Proposed System: Diagram 2 Underwrite Request........... .......... .......... ........... .......... .......... .......... ........... .... 15Proposed System: Diagram 3 Rate Request........... .......... ........... .......... .......... .......... ........... .......... ........... .... 16Proposed System: Diagram 4 Issue Policy ................................................................................................... 17

DATA DICTIONARY ............................................................................................................................................... 18Proposed System: Accepted-Price-Quote Dataflow .......................................................................... 18Proposed System: Assembled-Policy-Writing-Request Dataflow.................................................. 19Proposed System: Written-Request Dataflow ..................................................................................... 20Proposed System: Prioritized-Underwriting-Request Dataflow...................................................... 21Proposed System: Standard-Completion-Times Dataflow............................................................... 22Proposed System: Assign Request Priority Process.......................................................................... 23Proposed System: Analyze Pricing Data Process ............................................................................... 24Proposed System: Calculate Due Date Process................................................................................... 25Proposed System: Branch Policy Archive File File........................................................................... 26Proposed System: Active Processing File File .................................................................................. 28Proposed System: Request History File File ...................................................................................... 30

PROPOSED SYSTEM CHANGES.......................................................................................................................... 31

OVERVIEW ............................................................................................................................................................ 31CHANGES IN PROCESS 1 - PREPARE REQUEST ....................................................................................................... 31CHANGES IN PROCESS 2 - UNDERWRITE REQUEST ................................................................................................ 32CHANGES IN PROCESS 3 - RATE REQUEST............................................................................................................. 32CHANGES IN PROCESS 4 - ISSUE POLICY ............................................................................................................... 33

TEAM LEADERS ATTENDANCE/CONTRIBUTION REPORT. ....................................................................... 34


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TEAM 3 Systems Analysis and Design Project STAGE 2 MGT 772SB

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APPENDIX A: EXHIBITS....................................................................................................................................... 35

EXHIBIT 1: UNDERWRITING TEAM PRODUCTIVITY ................................................................................................ 35EXHIBIT 2: DEPARTMENT PRODUCTIVITY ............................................................................................................. 36EXHIBIT 3: PROCESSING TIME ............................................................................................................................... 36EXHIBIT 4: ORDINARY LOSSES.............................................................................................................................. 37EXHIBIT 5: COMPARISON OF BRANCH PROFITS TO RUN AND RERUN PREMIUMS ............................................... 37


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Case basis: Manzana Insurance - Fruitvale Branch (Harvard Business School case 9-692-015)

System Overview

Description

The system being studied encompasses the operations workflow and processing of property

insurance policies at the Fruitvale branch of Manzana Insurance. The system processes four types

of policy requests and relies on the distribution of work among various departments within the

branch. Proposed changes to the existing system will attempt to create operational efficiencies

and streamline the processing workflow.

Policy Request Types

RUN Request for underwriting processing of a new policy RERUN Request for renewal processing of a policy renewal RAIN Request for additional insurance processing of a policy endorsement RAP Request for a price processing of a price quote

Background

The Fruitvale branch has become Manzanas worst performing branch, and Manzana is being

severely outperformed by a competitor, Golden Gate Casualty, in Fruitvales territory. The

turnaround time (TAT) for processing a request has grown to exceed five days at a time when

Golden Gate began guaranteeing one day TAT. This important measure of service could be a

large factor in Fruitvales loss of business. Improving the system would result in operational

efficiencies, improved service, and hopefully an increase in business.

Current Organizational Problems and Goals for the New System

The organizational problems and goals were derived from a study of the facts provided in the

case and supported by an organizational and financial analysis submitted during stage 1. They are

presented here in rank order.

Problem 1: Average turnaround time (TAT) is too lengthy.

Turnaround time is an important indicator of service quality used by originating agents

to help customers choose an insurance company. Fruitvales average TAT for processing

a request had grown to six days when Golden Gate began guaranteeing one day TAT.

Goal: Modify system to decrease turnaround time.

The new system will automate and streamline certain tasks and track the processing

status of requests. These changes should create efficiencies that will lead to shortened

turnaround time.


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Problem 2: Large number of late renewals.

RERUNs are currently held until the last day before their due date. Agents expect a

renewed contract offer before the expiration of the old policy. Late renewals result in a

large renewal loss rate, representing a significant loss of business.

Goal: Modify system to decrease the number of late renewals.

The new system will deliver RERUNs to the originating agents with sufficient time

before expiration. Processing will be monitored so that alerts are generated when

processing falls behind schedule.

Problem 3: Large backlog of policies.

An inconsistent priority system among departments causes downstream problems. For

example, the Rating Department is unable to address its backlog because of consistently

late RERUNs from the Underwriting Department.

Goal: Modify system to decrease backlog of policies.The new system will automatically calculate processing due dates and assign

processing priorities to each request that enters the system. A new computerized

workflow will help standardize and enforce prioritization.

Problem 4: Organization structure and operations workflow are not optimal.

The current inefficient workflow is based on a non-optimal distribution of staff.

Goal: Align staffing with needs of the new system.

A structural reorganization will facilitate implementation of the new system.

Problem 5: Departments do not adhere to documented procedures.Different departments seem to follow their own interpretation of procedures and

company policies.

Goal: Document and standardize procedures.

Updated procedures will be developed along with the new system. In order for

efficiencies to be realized, the procedures must be observed and maintained.

Problem 6: Salaries and bonuses are not aligned with profitability.

The "Salary Plus" program rewards senior underwriters and division managers for each

new policy written. As a result, certain employees place increased emphasis on new

policies and price quotes at the expense of renewals.

Goal: Provide management with profitability analysis of new and renewal policies.

A profitability analysis report will show that a new compensation structure should be

developed to place emphasis on profitability rather than on a specific type of policy.


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Existing System

Dataflow Diagrams

Existing System: Context Diagram Insurance Request Processing System


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Existing System: Parent Diagram Insurance Request Processing System


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Existing System: Diagram 1 Prepare Request


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Existing System: Diagram 2 Underwrite Request


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Existing System: Diagram 3 Rate Request


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Existing System: Diagram 4 Issue Policy


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Proposed System

Dataflow Diagrams

Proposed System: Context Diagram - Insurance Request Processing System

Note: Modifications from theexisting dataflow diagrams

are highlighted in bold on theproposed dataflow diagrams.


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Proposed System: Parent Diagram Insurance Request Processing System


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Proposed System: Diagram 1 Prepare Request


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Proposed System: Diagram 2 Underwrite Request


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Proposed System: Diagram 3 Rate Request


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Proposed System: Diagram 4 Issue Policy


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Data Dictionary

Proposed System: Accepted-Price-Quote Dataflow

Description:Insurance request resumed when an Originating Agent accepts a Price-Quote.

Alias:

Accepted RAP

Composition:

[System Data]

Processing Status + Request ID + Customer ID + Agent ID + Request Type +

Description + Due Date + Priority + Underwriter ID + Underwriter Specification

+ Rater ID + Calculated Premium

Notes:

Accepted-Price-Quotes have already gone through the underwriting and rating

processes and are sent directly to policy writing where they are processed on a

FIFO basis. This resumes the processing of a request that was placed on hold

when a Price-Quote was issued.

Location:

Insurance Request Processing System (Parent)

Source: Originating Agent (External Entity)

Dest: Issue Policy (Process)

Issue Policy (4)Source: Originating Agent (External Entity)

Dest: Assemble Standard Policy (Process)


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Proposed System: Assembled-Policy-Writing-Request Dataflow

Description:

Computerized version of all standard policy pages required for a specific policy.

Alias:

Boiler-Plate-Policy

Composition:

[System Data]



+ Rater ID + Calculated Premium + Boiler-Plate

[Customer Data]

Client Name + Client Address + Property Address + Property Owner + Property

Age + Individual Property Size + Total Property Size + Property Type + ClientBusiness Legal Entity + Industry Category + Business Description + Ownership

Status (Own/Lease) + No. Full Time Employees + No. Part Time Employees +

No. Subcontractors + Current Insurance Status + Current Insurance Company +

Current Insurance Expiration + Current Annual Premium + Coverage Amount

Requested + Deductible Requested

[Property Data]

Sprinkler System + Smoke Detector + Burglary Alarm + Security Guard + Fire

Alarm + Exterior Lighting + Barred Windows + Circuit Breakers + Fuses

Notes:

Compilation of standard insurance language for the type of risk insured.

Location:

Issue Policy (4)

Source: Assemble Standard Policy (Process)

Dest: Customize Policy (Process)


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Proposed System: Written-Request Dataflow

Description:

Hardcopy written request for insurance.

Alias:

RUN, RAP, RAIN

Composition:

[System Data]


Description

[Customer Data]


Age + Individual Property Size + Total Property Size + Property Type + Client

Business Legal Entity + Industry Category + Business Description + OwnershipStatus (Own/Lease) + No. Full Time Employees + No. Part Time Employees +




[Property Data]



Notes:

Mailed or faxed from an Originating Agent.

Location:

Insurance Request Processing System (Context)


Dest: Insurance Request Processing System (System)



Dest: Prepare Request (Process)

Prepare Request (1)


Dest: Log Request (Process)


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Proposed System: Prioritized-Underwriting-Request Dataflow

Description:

Complete set of all information required for the initiation of underwriting a

request.

Alias:

RUN, RAP, RAIN, RERUN

Composition:

[System Data]


Description + Due Date + Priority

[Customer Data]


Age + Individual Property Size + Total Property Size + Property Type + ClientBusiness Legal Entity + Industry Category + Business Description + Ownership





[Property Data]



Notes:

Pulled from the Active Processing File based on priority.

Location:


Source: Active Processing File (File)

Dest: Underwrite Request (Process)

Underwrite Request (2)

Source: Active Processing File (File)

Dest: Evaluate Request (Process)


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Proposed System: Standard-Completion-Times Dataflow

Description:

Average time required to process specific types of insurance request.

Alias:

SCT

Composition:

Standard Completion Times

Notes:

Based on a companywide study completed in 1986. Indicates standard completion

times sufficient to handle 95% of all requests. Processing times at the Fruitvale

branch are similar to those from the study.

Location:


Source: SCT File (File)

Dest: Prepare Request (Process)

Perpare Request (1)

Source: SCT File (File)

Dest: Calculate Due Date (Process)


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Proposed System: Assign Request Priority Process

Description:

Assigns processing priority to insurance policy requests.

Process Number: 1.5

Process Description:

Automatically retrieves prepared requests from the Active Processing File after

the due date has been determined. Assigns processing priority based on a modified

first-in-first-out (FIFO) system. An algorithm considering the date, time, type and

size of requests is used to calculate a unique priority for each new request. The

Branch Manager is able to assign a prioritization override to any request. The

prioritized prepared request in then fed back into the Active Processing File.

Notes:Priority is used to control the order in which work is performed by various

processes throughout the system.

Location:

Prepare Requests (1)

Input Flows:

Prepared-Request

Prioritization-Override

Output Flows:

Prioritized-Prepared-Request


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Proposed System: Analyze Pricing Data Process

Description:

Analyze insurance pricing data from disparate sources.

Process Number: 3.1


Prioritized Rating Requests are pulled from the Active Processing File. Current

insurance rates are researched and verified by compiling pricing information from

Historical-Pricing-Data extracted from the Branch Policy Archive File, Published-

Insurance-Data obtained from the State Insurance Commissioner, and Sample-

Insurance-Quotes gathered from competitors. An Analyzed-Rating-Request is

then submitted for premium calculation.

Notes:Performed on a continual basis when Prioritized-Rating-Requests are available.

Location:

Rate Request (3)

Input Flows:

Prioritized-Rating-Request

Historical-Pricing-Data

Published-Insurance-Data

Sample-Insurance-Quotes

Output Flows:

Analyzed-Rating-Request


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Proposed System: Calculate Due Date Process

Description:

Calculates processing due date for active requests.

Process Number: 1.4


Immediately after a request is entered into the Active Processing File, the

Recorded-Request and Current-Workload Statistics are pulled from the same file.

This data is combined with Standard-Completion-Times from the SCT File and

used to calculate the current average turnaround time (TAT). The TAT is then

added to the current date to set the processing due date for a request. The Due-

Date is transferred into the Active Processing File. The Quoted-Due-Date is sent

back to the Originating Agent for all requests except renewals.

Notes:

This process is performed on a real-time basis

Location:

Prepare Request (1)

Input Flows:

Recorded-Request

Current-Workload-Statistics

Standard-Completion-Times

Output Flows:

Due-DateQuoted-Due-Date


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Proposed System: Branch Policy Archive File File

Description:

Contains historical information about issued policies and calculated premiums.

Composition:

[System Data]

Request ID + Customer ID + Agent ID + Description + Underwriter ID + Rater ID

+ Premium + Boiler-Plate + Policy Customizations + Policy ID + Issue Date +

Expiration Date

[Customer Data]



Business Legal Entity + Industry Category + Business Description + Ownership


No. Subcontractors + Current Insurance Status + Current Insurance Company +Current Insurance Expiration + Current Annual Premium + Coverage Amount


[Property Data]



Notes:

Location:


Input Flows:Issued-Archival-Policy

Output Flows:



Input Flows:

Calculated-Premium

Issued-Archival-Policy

Output Flows:



Output Flows:Historical-Pricing-Data


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Rate Request (3)

Input Flows:

Calculated-Premium

Output Flows:

Historical-Pricing-DataIssue Policy (4)

Input Flows:

Issued-Archival-Policy


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Proposed System: Active Processing File File

Description:

Contains all active requests in the system.

Composition:

[System Data]



+ Rater ID + Calculated Premium + Boiler-Plate + Policy Customizations

[Customer Data]



Business Legal Entity + Industry Category + Business Description + Ownership


No. Subcontractors + Current Insurance Status + Current Insurance Company +Current Insurance Expiration + Current Annual Premium + Coverage Amount


[Property Data]



Notes:

Process 1: The computerized system stores request information in the Active

Processing File. The system will then update the file with a due date, assign a

priority level, and distribute the request to the next available underwriting team.

Process 2 : The system submits Prioritized-Underwriting-Requests to be evaluated

and upon the completion of selecting, classifying, and pricing requests, the system

will send Underwritten-Request to the Active Processing File.

Process 3: Prioritized-Rating-Request is submitted for price data analysis. The

system will subsequently calculate premiums. The Rated-Request is then

transferred to the Active Processing File.

Process 4: The system submits Prioritized-Policy-Writing-Requests to be

assembled. Assembled-Policy-Writing-Requests are then customized and printed.

The system will provide a Completion-Status-Update to the Active ProcessingFile. This is an indication to the system that the request has been completed and a

policy has been issued.


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Location:


Input Flows:


Insurance Request Processing System (Parent)Input Flows:

Request-Details

Due-Date


Underwritten-Request

Rated-Request

Completion-Status-Update

Output Flows:

Recorded-Request

Current-Workload-Statistics

Prepared-RequestPrioritized-Underwriting-Request

Prioritized-Rating-Request

Prioritized-Policy-Writing-Request

Prepare-Request (1)

Input Flows:

Request-Details

Due-Date


Output Flows:

Recorded-Request

Current-Workload-StatisticsPrepared-Request


Input Flows:

Underwritten-Request

Output Flows:

Prioritized-Underwriting-Request

Rate Request (3)

Input Flows:

Rated-Request

Output Flows:

Prioritized-Rating-RequestIssue Policy (4)

Input Flows:

Completion-Status-Update

Output Flows:

Prioritized-Policy-Writing-Request


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Proposed System: Request History File File

Description:

Log file of all requests received into the system.

Composition:

Request ID + Customer ID + Agent ID + Request Type + Description + Date

Received + Time Received

Notes:

Contains a record of summary information from every insurance request. Requests

are logged even if they are rejected. The file is used for auditing and reporting

purposes.

Location:

Insurance Request Processing System (Parent)Input Flows:

Request-Summary

Prepare Request (1)

Input Flows:

Request-Summary


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Proposed System Changes

Overview

Changes to the existing system have been proposed within all major processes and can be seen inthe context dataflow diagram, parent dataflow diagram, and all four child dataflow diagrams. The

description and discussion below will focus on changes as they are reflected in the child dataflow

diagrams.

One of the most significant changes that can be seen throughout the system is the move from a

paper-based workflow to a computer-based workflow. Although the existing system does make

use of computers, requests pass between departments in hardcopy form. The proposed system

makes use of the Active Processing File to store data as it flows throughout the system.

Another hallmark of the proposed system is the implementation of standardized prioritization

rules. When a request enters the system, not only is a due date dynamically determined, but apriority is also assigned. This priority is used to control the order in which work is performed by

various processes throughout the system. The ultimate intent of this modification is to

standardize request processing and, hopefully, shorten average turnaround time and reduce the

backlog of policies.

Changes in Process 1 - Prepare Request

The scope of process 1.3 has increased from "Input Request Data" to "Input and Prepare Request

Data." The notable difference in the proposed process is that the Tickler System now sends

renewal requests into process 1.3 rather than into process 1.1 ("Log Request"). Within this

proposed process, distribution clerks manually enter written requests into the Active ProcessingFile, and renewal requests are automatically transferred into the same file.

The Request Data File in the existing system has been replaced by the Active Processing File in

the proposed system. The Active Processing File is an enhanced file that stores customer data

along with system data. Specifically, system data is any data necessary for the ongoing

processing of a request within the system. Underwriting specification is an example of system

data, as its contents include processing instructions for rating and policy writing. The existing

Request Data File is primarily used to store customer data for future retrieval and for transfer to

other departments, but is unable to capture system information. This shortcoming is one large

reason for the reliance on paper in the existing system.

Immediately after a request is entered into the Active Processing File, process 1.4 ("Calculate

Due Date") pulls the recorded request and the current workload statistics. This data is combined

with standard completion times from the SCT File to calculate the average turnaround time. This

figure is then used to set the processing due date for a request, which is entered into the Active

Processing File as system data. The due date is also quoted back to the Originating Agent for all

requests except renewals. The existing system relies on the Branch Manager Weekly Report File


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for expected turnaround time to be used in the calculation. The key benefit in the proposed

system is a dynamic means of determining turnaround time.

Process 1.5, "Assign Request Priority," is an automated process that retrieves prepared requests

from the Active Processing File and assigns processing priority based on a modified first-in-first-

out (FIFO) system. An algorithm considering the date, time, type and size of requests is used tocalculate a unique priority for each new request. The Branch Manager is able to assign a

prioritization override to any request. The prioritized prepared request in then fed back into the

Active Processing File to await underwriting. Requests are later pulled from the Active

Processing File based on priority. In contrast, the existing system relies on distribution clerks to

print each request and assign it to the correct underwriting team.

Company policy mandates use of a first-in-first-out prioritization system. In the existing system,

however, each department prioritizes requests based on its own needs, with a particular emphasis

on new business (RUNs and RAPs). This has contributed to processing delays and a backlog of

requests. It should be noted that processing time for a RUN is 33% longer than that for a RERUN

(Exhibit 3). Historically, new policies generate higher ordinary losses compared to renewalbusiness (Exhibit 4), and are less profitable than renewal business (Exhibit 5). By assigning

request priorities, the proposed system eliminates the ability of different departments to

implement their own prioritization rules.

Changes in Process 2 - Underwrite Request

Process 2.1, "Evaluate Request," begins when an underwriting team pulls a prioritized

underwriting request from the Active Processing File. In the existing system, each underwriting

team is assigned to the Originating Agents within a particular territory. This approach to

workload distribution proved unsuccessful. In the proposed system, teams pull requests based

strictly on priority, without any consideration of geographic territory. This change shouldeliminate the problem where a particular underwriting team may be overworked one day and idle

a week later. Exhibit 1 shows that the average workload between teams is disproportionate. Team

1 processed 11% more policies than Team 2, and 30% more than Team 3. In addition, they were

more productive than the other two teams. In the proposed system, the workload is distributed

evenly among the underwriting teams to prevent bottlenecks.

As a request flows through the "Underwrite Request" process, it picks up system information

needed for later processes. Grouped together, this information is referred to as the underwriting

specification, and is transferred into the Active Processing File as an underwritten request.

Changes in Process 3 - Rate Request

Process 3.1, "Analyze Pricing Data," begins when a prioritized rating request is pulled from the

Active Processing File. Data from the State Insurance Commissioner and Competitors is

identical in the existing system, but historical pricing data is now pulled from the Branch Policy

Archive File. In the existing system, the historical pricing data is pulled from the Policy Premium

File, which is no longer necessary in the proposed system.


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It is important to note that the analysis of pricing data (3.1) and calculation of premiums (3.2) are

mostly automated in the proposed system. This change is warranted because the Rating

Department has the second lowest productivity level of all departments (Exhibit 2). By

automating a task that is noted to be almost purely mechanical, the proposed enhancement will

help reduce turnaround time for the rating process. The raters will be primarily responsible forapproving computer-generated premiums. At the completion of process 3.3, "Approve Rated

Request," the calculated premium is fed into the Branch Policy Archive File. This allows the

premium to be used for historical information even if the request is a price quote that never

becomes an issued policy. To complete the "Rate Request" process, a price quote is sent back to

the Originating Agent, or a rated request is transferred into the Active Processing File.

Changes in Process 4 - Issue Policy

Process 4.1, "Assemble Standard Policy," begins with a prioritized policy writing request from

the Active Processing File, or with an accepted price quote from an Originating Agent. All policy

writing information necessary to complete processing is pulled from the Active Processing File.In the existing system, the requisite information is passed directly from the rating department

after the premium is calculated.

One big change in the proposed system is that the policies are electronically assembled (4.1) and

customized (4.2) automatically. This is possible because all information necessary to complete

these processes is available as system data in the computerized request. In contrast, the existing

system contains much of the same data in hardcopy format, therefore requiring the manual effort

of policy writers to complete the work. Currently, the Policy Writing Department has the lowest

productivity level of all departments (Exhibit 2). The proposed automation enhancement will

help reduce the turnaround time and increase productivity.

In the proposed system, policy writers will be responsible for approving the computer-generated

customized policies (4.3) before the required number of copies are printed (4.4). Process 4.4,

"Print Policies," obviates the need for a "Duplicate Policy" process to be performed by a copy

clerk.

Finally, after policies are filed and issued (4.5), the Active Processing File is updated with a

completion status update for the current request. A future system enhancement will replace

standard completion times from the SCT file with actual average completion times from the

Branch Policy Archive File.


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Team Leaders Attendance/Contribution Report.

All team members attended all scheduled meetings and contributed equally to the project.


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Appendix A: Exhibits

Exhibit 1: Underwriting Team Productivity

RUN's RAP's RAIN's RERUN's Total

Potential Polices Processed

Min 31,764.7 9,000.0 108,000.0 12,857.1

Max 90.2 136.7 131.4 75.0

Mean 1,238.5 1,421.1 2,389.4 2,887.7 7,936.7

Team1 162 761 196 636 1,755

Percent Processed

Min 1% 8% 0% 5% 14%

Max 180% 557% 149% 848% 1734%Mean 13% 54% 8% 22% 97%

Policies Processed per day 1.35 6.34 1.63 5.30 14.63

Team 2 100 513 125 840 1,578

Percent Processed

Min 0% 6% 0% 7% 13%

Max 111% 375% 95% 1120% 1702%

Mean 8% 36% 5% 29% 78%


Team 3 88 524 130 605 1,347

Percent Processed

Min 0% 6% 0% 5% 11%

Max 98% 383% 99% 807% 1387%

Mean 7% 37% 5% 21% 70%


Total

Percent Processed

Min 0% 7% 0% 5% 13%

Max 129% 438% 114% 925% 1608%

Mean 9% 42% 6% 24% 82%Policies Processed per day 2.92 14.98 3.76 17.34 39.00

Based on processing result in the first 6 months of 1991.


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Exhibit 2: Department Productivity

ProductivityRUN RAP RAIN RERUN Total

Department

Distribution (4 staff) 11% 42% 9% 27% 89%

Underwriting Team - 1 (2 staff per team) 13% 54% 8% 22% 97%

Underwriting Team - 2 (2 staff per team) 8% 36% 5% 29% 78%

Underwriting Team - 3 (2 staff per team) 7% 37% 5% 21% 70%Total Underwriting 9% 42% 6% 24% 82%

Rating (8 Staff) 6% 27% 7% 36% 76%

Policy Writing (5 staff) 16% n/a 9% 39% 64%

Note: The "Mean" processing time was used to calculate dept. productivity.

Based on polices processed in the first half of 1991.

Exhibit 3: Processing Time

Processing Time

Distribution Underwriting Rating Writing Total

Run 68.5 43.6 75.5 71 258.6

RERUN 28 18.7 75.5 50.1 172.3

Difference 86.3

A new Policy takes 1/3 longer to process and is less profitable! 33%

Change strategy to focus on Renewal business


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Exhibit 4: Ordinary Losses

Exhibit 5: Comparison of Branch Profits to RUN and RERUN Premiums

Comparison of Branch Profits to Gross Premiums

(in thousands)

($500)

$0

$500

$1,000

$1,500

$2,000

$2,500

Mar'89Jun'89Sep'89Dec'8

9Mar'90Jun'90Sep'9

0Dec'9

0Mar'91Jun'91 $6,000

$6,200

$6,400

$6,600

$6,800

$7,000

$7,200

$7,400

Branch Profit

RUN Premiums

RERUN Premiums

Insured Losses and New Premium Revenue

$0$1,000$2,000$3,000$4,000$5,000$6,000$7,000

Mar'89

Jun'89

Sep'89

Dec'89

Mar

'90

Jun

'90

Sep

'90

Dec

'90

Mar

'91

Jun

'91

$0

$500

$1,000$1,500$2,000$2,500

Ordinary Losses

RUN Premiums

In thousands

sample phase 2

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