Process Flow:

All the requests of RUN, RAP or RAP are received through an agent. Distribution
clerk receives the request from the agent and he logs all the incoming requests
into a computer for future retrieval. Distribution is also responsible for analysing
and disseminating data published each month by state insurance commissioner,
researching and verifying insurance rates quoted by local competitors and
overseeing the rating operations. Then each request is passed to its assigned to
underwriting team whose responsibility is to evaluate, select, classify and price
the policy. After review and classification the request is passed to underwriting
team which calculates the premiums. Then the requests are transferred to Policy
writing Department where actual typing, assembly, and distribution takes place.
However for the RAP, the transfer to the policy writing is not automatic. After
rating the RAP is returned to distribution clerk, who was responsible for sending
price quote to originating agent. Most quotes were accepted or rejected within
10 days. If the quote is accepted, it becomes RUN and same process continues.

Process Flow Diagram

We can identify the number of requests received by each team from the data
given in Exhibit 7.
No. of Requests = (No. of RUNS + No. of RAPS + No. of RAINs + No. of RERUNs)/
(20 days *6)
Total No. of requests received by the Fruitvale branch in a day = 39
Underwriting Team 1
No of Requests in a day (1991) = (162 + 761 + 196 + 636) / (120)
= 14.625

Underwriting Team 2
No of Requests in a day (1991) = (100 + 513 + 125 + 840) / (120)
= 13.15
Underwriting Team 3
No of Requests in a day (1991) = (88 + 524 + 130 + 605) / (120)
= 11.225

From Exhibit 7,
No. of RAPs in a day (1991) = (1798/120)
= 15
According to the case only 15% are converted for policy writing.
No of request for policy writing in a day = 0.15 * 15
= 2.3
Although 24 requests i: e (39-15) are directly send for policy writing.
No of requests received by policy writing department in a day = 2.3 + 24
= 26.3

Process Flow Diagram with No. of requests in each

department in a day

Currently Fruitvale branch is using 95% Standard Completion time for calculating
turnaround time.

RUNs

Capacity Utilization
Using Mean Time (From Exhibit
Distribu Under
Rating
Policy
tion
& Writing s
Writing
Review
(In
(In
(In
(In
Mins)
Mins)
Mins)
Mins)
68.5
43.6
75.5
71

RAPs

50

38

64.7

RAINs

43.5

22.6

65.5

54

RERUNs

28

18.7

75.5

50.1

4)
Total
mins

258.
6
152.
7
185.
6
172.
3

No. of
polici
es in
1990

No. of
man
hours

678

2922.18

3079

7836.05

895

2768.53

4987

14321

No. of

27847.
77
36000
77.3%

Total No. of man hours

Max Total No. of man hours (20*7.5*20*12)
Capacity Utilization (Total No. of man hours / Max Total
man hours)
Using 95% SCT (From Exhibit 4)
Distribu Under
Rating
Ratings Total
tion
& Writing s
(In
mins
Review
(In
(In
Mins)
(In Mins Mins)
Mins)
RUNs
128.1
107.2
112.3
89.3
436.
9
RAPs
107.8
87.5
88.7
0
284
RAINs
RERUNs

68.1
43.2

49.4
62.8

89.4
92.2

72.1
67

279
265.
2

No. of
polici
es in
1990
678

No. of
man
hours

3079

14573.9
3
4161.75
22042.5
4
45715.
19
36000
126.9
%

895
4987

Total No. of man hours

Max Total No. of man hours (20*7.5*20*12)
Capacity Utilization (Total No. of man hours / Max Total No. of
man hours)

4936.97

When we calculated the capacity utilization using both the standard completion
time and mean time we can see that using 95% SCT, the capacity utilisation is
126.9 %, which is not possible. So another way to approach is use of Mean

processing time rather than 95% SCT. Using the mean processing the capacity
utilization is 77.3%.

Capacity utilization of each Department

Weighted avg.
processing time
per request (Mins)
No. of Employees
Avg. working hours
per employee
Total capacity
(60*Avg. working
hours * No of
employees )/Avg.
request time
Total requests in a
day
Capacity utilization
(Total requests per
day / Total capacity)

Distributio
n & review
41.0

Underwritin
g
28.4

Rating
70.4

Policy
writing
54.8

4
7.5

3
7.5

8
7.5

5
7.5

43.9

47.5

51.4

41.06

39

39

39

26.3

88.8%

82.1%

75.8%

64%

Capacity utilization of underwriting teams located in three different

Territories.
Under Writing

Territory 1
28.4

Territory
2
28.4

Territory
3
28.4

Weighted avg. processing

time per request (Mins)
No. of Employees
Avg. working hours per

1
7.5

1
7.5

1
7.5

employee
Total capacity
(60*Avg. working hours * No of
employees )/Avg. request time
Total requests per day
Capacity utilization (Total
requests per day / Total capacity)

15.8

15.8

15.8

14.625
92.3%

13.15
83%

11.225
70.8%