Banggc Case Study Solution
1. What situation Isom or P&C is facing?
Isom joined the board of CIGNA in March, 1993 as the president of the property and casualty division. Situation at that moment can be described as
• CIGNA P&C had total 6500 employees operating through the United States, $4 billion of revenues and very poor results for past five years.
• Division was plagued with serious weakness in management and poor supplier relationships.
• It was experiencing severe financial stress, loosing almost $1billion between 1989 and 1993. In 1993, it had “combined ratio” of 140% i.e. $1.40 in losses and expense for every incoming $1.00 in earning for the division.
• Series of 1992 natural disasters and Los Angeles riots, compounded …show more content…
Is Isom’s business vision responsive to the situation?
In general, most of the companies in property and casualty insurance business would want to be high performing specialists rather than generalists.
Yes, in this case however his vision was responsive to the situation. He had a good view of the situation and knew that radical shift in the divisions strategy is required to turn around the future.
P&C was a low performing generalist insurance division
• Years of pursuing a wide range of market segments had alienated a large number of qualified agents. P&C’s generalists’ strategy has confused agents as to which type of risks they were seeking to underwrite.
• At times the firm had attempted to underwrite anything that generated premiums, sometimes with almost no consideration of risk. Approach boosted revenues but also increased the volumes of claims even more and with disastrous consequences to bottom line.
• Claims usually paid more than what was required just to keep customers happy and maintain relationships with them, which further reduced chances of making profits.
Isom’s vision was to radically change this situation by
• Fundamentally converting its products, customers, mind-set, processes, behaviors and …show more content…
What is your Assessment of Reengineering Design?
The re-engineering design involved the following
• Empowering the knowledge worker through IT – this would have allowed more responsibilities and authority to employees who are core strength of P&C and can help them to drive up performance by leveraging technology to not just distribute information, but knowledge and skill. It intended to take them from the path of being responsive, to being consultative and finally solving customer problems before they even appear.
• Two-tier approach to communication – This intended to collect all the structured and unstructured business information available with employees, identify what is useful for other employees and organization, then store it in an organized format so that it is easy to access for others. This involved the insights collected by claims department which get communicated to underwriting team to do their job better.
• Balanced Scorecard – allowed to develop multiple performance measures to assess the achievement of company’s business vision and to track these measures as a way to effectively manage implementation program and appraise
Isom joined the board of CIGNA in March, 1993 as the president of the property and casualty division. Situation at that moment can be described as
• CIGNA P&C had total 6500 employees operating through the United States, $4 billion of revenues and very poor results for past five years.
• Division was plagued with serious weakness in management and poor supplier relationships.
• It was experiencing severe financial stress, loosing almost $1billion between 1989 and 1993. In 1993, it had “combined ratio” of 140% i.e. $1.40 in losses and expense for every incoming $1.00 in earning for the division.
• Series of 1992 natural disasters and Los Angeles riots, compounded …show more content…
Is Isom’s business vision responsive to the situation?
In general, most of the companies in property and casualty insurance business would want to be high performing specialists rather than generalists.
Yes, in this case however his vision was responsive to the situation. He had a good view of the situation and knew that radical shift in the divisions strategy is required to turn around the future.
P&C was a low performing generalist insurance division
• Years of pursuing a wide range of market segments had alienated a large number of qualified agents. P&C’s generalists’ strategy has confused agents as to which type of risks they were seeking to underwrite.
• At times the firm had attempted to underwrite anything that generated premiums, sometimes with almost no consideration of risk. Approach boosted revenues but also increased the volumes of claims even more and with disastrous consequences to bottom line.
• Claims usually paid more than what was required just to keep customers happy and maintain relationships with them, which further reduced chances of making profits.
Isom’s vision was to radically change this situation by
• Fundamentally converting its products, customers, mind-set, processes, behaviors and …show more content…
What is your Assessment of Reengineering Design?
The re-engineering design involved the following
• Empowering the knowledge worker through IT – this would have allowed more responsibilities and authority to employees who are core strength of P&C and can help them to drive up performance by leveraging technology to not just distribute information, but knowledge and skill. It intended to take them from the path of being responsive, to being consultative and finally solving customer problems before they even appear.
• Two-tier approach to communication – This intended to collect all the structured and unstructured business information available with employees, identify what is useful for other employees and organization, then store it in an organized format so that it is easy to access for others. This involved the insights collected by claims department which get communicated to underwriting team to do their job better.
• Balanced Scorecard – allowed to develop multiple performance measures to assess the achievement of company’s business vision and to track these measures as a way to effectively manage implementation program and appraise