Mutual Life

Overview:

Mutual Life is one of Canada's largest insurers which served approximately 1.35

million people in 9,600 groups in Canada and the northern United States. It has five divisions

each headed by a senior or executive vice-president which includes the Group Division

headed by Alex Brown, senior vice-president. It specialized in employee group benefit

programs such as life, health, rehabilitation, and pension products. In August, 1992, Mutual

Life's Group Division developed a service that offered a no-questions-asked guarantee

equivalent to $10 for each employee covered up to a maximum of $10,000. George Draper,

the representative from Consolidated's Hamilton, Ontario, branch, client of Mutual Life, had

told Janet Desilva, regional group marketing director of Mutual Life, that he wanted to invoke

the Group client Service Guarantee. It is critical that Mutual Life makes sure that their clients

do not take advantage of the guarantee policy.

Problems:

At the Group Divisions of Mutual Life, the person claiming the guarantee policy,

frequently, does not understand the benefits of the program, or had claimed without letting his

or her mangers know. The employees do not know how to handle the claims. Such occurrence

causes some embarrassment for all parties involved. Mr. Brown is also the one handling all

the claims. Junior administrators making claims increase potential abuse. With the

introduction of the no-questions-asked guarantee, Group Division is exposing the company

to potential abuse. Customers without service complaints, take advantage of the cash that

Mutual Group is offering. In this case, George Draper is threatening to make a claim. Profits

felt from $100 million in 1991 to $64 million last year due to tough operating climate

combined with real estate losses in the investment portfolio. In April 1, 1994, the Hamilton

local claims office will close, which means that all claims processing for Hamilton will be

centralize in the regional claims office in Toronto. If a client indicates a desire to claim, a

cheque is send immediately, no questions asked. Only after that, the vice-president calls the

client to address the concerns.

Causes:

There is a lack of fit between task and people evidenced by a few incidents that

happened in the dealing of the claims on the guarantee. Such incidents caused confusion and

embarrassment for both parties involved. In one case, one client had returned the claim

guarantee cheque with a letter of apology. This proves that the employees of Mutual Group do

not know how to handle claims properly.

There is a lack of fit between organizational structure and tasks evidenced by the fact

that Mr. Brown is handling all the claims. Upon feedback receipt, the assessment letters are

forwarded to Mr. Brown for a quick review and then delivered by hand to staff responsible for

administering the guarantee which makes Mr. Brown's work task overloaded. The lack of

communication from the division's senior managers to the rest of the employee prevents the

staff to become more anticipatory in their management of activities.

There is a lack of fit between process and task evidenced by the way feedbacks are

dealt with. Clients' feedback information is being stored in two information areas which make

it harder to develop a better picture of a client relationship based on its interaction with

different areas of the division over the course of a year. Right now, the division is more

reactive than anticipatory. The poor management of data on clients makes it difficult to

perform the best service possible.

Goals:

1- Preventing abuse from customers in their claims.

2- Reducing claims by 1%.

3- Increasing surveys respond from 40% to 60%.

Actions:

The Mutual Group has to change their no-questions-asked guarantee. When a

customer fills a claim, Mutual Group must investigate into that claim. Mutual Group has to

create a new job and hire someone qualify to do such task. Right now, the no-questions-asked

guarantee exposes the company to abuse. Mutual Group has to call the client that files a claim

first. An investigation should follow. Claims must only be made by high management in the

company such as a senior vice president or a president. All the parties involved have to be

fully awarded of all aspects involve