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… Hence was best suited to be approached for complete transformation of P&C
• Valerio has worked at Gemini consulting along with Renaissance consulting in assisting companies in implementing Balanced Scorecard. Hence, he was confident in their ability and was a strong reference for Isom.
After the analysis P&C was convinced that its core business processes need to be reevaluated and redesigned – the efforts were centered on producer management relations, underwriting and claims management.
• This was required to build key relationships with agents and reduce frustration and confusion among them
• Focus on profitable markets and weed out non-profitable risk underwritings from the portfolio
• Manage claims in a faster to reduce the severity loss.
• To transform the static value chain into a dynamic and interactive value chain with feedback loops.
The approach to the complete re-engineering is considered as good for the following reasons
• Experts, Renaissance and Gemini consulting, were involved to execute the