Glic Insurance Agency Case Study full solution

CASE STUDY OBJECTIVES

In this case study, you will evaluate the needs of a small agency, named Glic Insurance Agency, and determine how it can more utilise its computer systems and IT infrastructure more effectively. As part of this coursework, you will have the opportunity:
- To develop two methods for configuring computer systems, and provide networked computing resources for a small insurance agency
- To evaluate strengths and weaknesses of each of the configuration methods
- To consider management and administrative issues relating to sharing computer resources
- To recommend a computing strategy that supports the future growth of the agency

THE AGENCY

The Glic Insurance Agency is an insurance brokerage company representing several different insurance companies. The agency is located in a small town with a population of approximately 60,000. The town also services the needs of a rural population of approximately 25,000. For 25 years, Glic was owned and managed by Jack Jones. Glic operated from two small offices located at either end of the city for the convenience of its clients. One office had six employees: three insurance brokers and three office administrators; the other office has eight employees: four brokers and four office administrators. Three months ago, Jones sold his business to Bill Brown.

Bill Brown's business philosophy was different from Jack Jones's. Although the business was successful when he bought it, he believed it would be more profitable if the two offices were consolidated. With one central office, office rental, supplies, equipment, and telephone costs could be reduced. Moreover, with one central location, the administrative staff could be reduced by one person without diminishing service.

With this in mind, Brown moved Glic into a renovated house in the central business area of the town. The building provides room for expansion if the agency grows. Two employees left the agency when it was sold; one insurance agent and one office administrator. Thus, Brown moved into the agency's new office with six insurance brokers and six office administrators. Brown also hired a secretary/receptionist.

GLIC'S BUSINESS

Glic is an independent insurance agency. It sells all types of insurance: car, home, life, medical, and business. Its primary customer base is private individuals. One of Brown's business plans is to substantially expand the commercial insurance segment of the business.

As an agent for several major insurance companies, Glic is able to place each client with the insurer that best matches the client's needs. The business has four major applications: sales, claims assistance, client administration, and accounting.

Sales

Under Jack Jones's administration, the sales cycle usually consisted of at least three parts. During the first segment, usually conducted at the client's office or home, the agent gathers information about the client's insurance needs, income, and so on. Next, the agent takes the data back to Glic's office for analysis. The agent then accesses one or more insurance carrier quotation systems to obtain the rates for several coverage options and to find the most cost-effective plans. Finally, the agent returns to the client with one or more insurance proposals. Jones had not kept statistics regarding the effectiveness of this approach. Brown, however, believed it contained a number of flaws which he intended to correct.

On some occasions, the first proposal(s) delivered to the client was/were not satisfactory. Often this meant that Glic's agent needed to go through another cycle of policy evaluations. Having an agent make multiple trips between the office and the client reduces the agent's efficiency. Brown wanted to implement a system whereby Glic's agent will meet with the client, access the insurance carriers' quotation systems as necessary, and arrive at a policy coverage / offer, during one client session.
The second flaw that Brown perceived was the interval between original client contact and the closure of a sale. The interval gave prospective clients an opportunity to contact other brokers or to change their mind completely. If the policy can be decided on and sold in one session, Glic would be less likely to lose prospective clients. Furthermore, the brokers would have more time to pursue new business.

Because Glic represents several insurance carriers, each of which has different options and incentives, it is difficult for Glic's agents to know which carrier is best for a given client. Usually, the client's profile and desired coverage are submitted to at least two carriers to find the best coverage and premium. In the past this has been done by referencing quotation books. Currently, however, Glic uses an office terminal to access a policy quotation system provided by each of the insurance carriers. Each of the offices had a modem for this purpose and the quotation systems are accessed via a telephone line on a local number, so line charges can be kept low.

The only difficulty Glic has experienced with the quotation system is that each agency has its own data requirements and formats. That is, each carrier expects to receive data in a different order and most require at least one data item that the other carriers do not need. This disparity among carriers means that the agent must input much of the same data several times to obtain a quotation.

Claims Assistance

Glic does not process insurance claims itself. The insurance carrier does all claims processing. However, the agency does provide its clients with claims assistance. For the most part, this
consists of five activities: forms handling, coverage determination, explanation of claimant's rights and obligations, providing an interface between clients and carriers, and record keeping.

Many of Glic’s clients are not completely aware of their coverage details. Glic assists these clients by reviewing their policies and explaining the client's coverage. This type of service is often a prelude to filing a claim. To determine the client's current coverage, Glic's administrators sometimes need to access the database of the insurance agency underwriting a policy. These databases can be accessed directly from the office using modems.

Until clients submit a claim, they deal only with Glic. Thus, many clients view Glic as their insurer. When making claims, most clients prefer to deal with Glic rather than with a large agency in another city. Glic’s agents and administrators thus sometimes serve as the mediator between the insurance carrier and a claimant or client.

Finally, Glic keeps records for each claim that is filed. This information is used to help the agents sell additional coverage to clients and to help detect fraudulent claims.

Client Administration

Glic maintains a database to keep track of clients, prospective clients, claimants, and insurance carriers. The database consists of both computerised and manually maintained files. Data in the database are updated whenever status changes occur, for example, payments, claims, cancellations, and so on.

Accounting

Like all companies, Glic has financial related applications: accounts receivable, accounts payable, general ledger, payroll, budgeting, and so on. Under Jack Jones, these applications were carried out mostly manually. Brown intends to computerise most of the accounting functions.

Anticipated Applications

Brown anticipates the need for a different marketing strategy if the business insurance segment of Glic's business is to grow. Sales to individuals primarily require one-to-one presentations for which professional presentation materials are not necessary. But marketing to a business will require that Glic makes formal presentations to business management. This means that Glic must improve its presentation services. As a minimum, Brown anticipates adding desk top publishing software, business graphics software, and a colour printer. These new resources need to be available to the entire staff. Finally, Brown would like to establish Glic on the Internet with a web site as part of opening up the agency to new markets. Doing business on the Internet is certainly another option that goes beyond a simple web presence but in this case Brown has to be convinced about the feasibility and chances of success of such an undertaking.

THE GLIC BUILDING

As mentioned above, Glic has just moved into a renovated house in the business district. Glic occupies the ground and first floor while the second floor is sublet to a small accounting company. The agency has complete flexibility to modify the structure to meet its business needs. When the building was renovated, central air conditioning and heating were installed, and all the wiring was converted to provide grounded power outlets. Because the renovators assumed that the building would be used by a business, they wired each room with either two or three telephone outlets. The telephone outlets are connected to a wiring hub in a utility room on the main floor. The telephone wiring is standard telephone twisted wire pairs. The telephone receptacles in each room are standard connectors.

The office building is a three story structure with a basement. Glic plans to use the basement primarily for storage. The ground floor houses the reception area, five brokers' offices, and Bill Brown's office. The first floor has five rooms, three of which are occupied by office administrators. The chief administrator occupies one of the rooms, and the other five administrators share the other rooms.

COMPUTING AT GLIC

Before consolidating the offices, Glic was a not a heavy user of computing. Each office had four microcomputers (PCs), one of which was connected to a modem to access the insurance carriers' systems. Each office had four early Pentium 4 computers. The Pentium machines had Windows XP installed when they were purchased. All microcomputers were used in a stand-alone manner. Some microcomputers had their own printer. In each office, one computer was connected to a laser printer and one computer was connected to an inkjet printer. The offices were relatively small; since only six or eight people occupied each office, sharing computer resources and information was done by physically sharing a particular device.

The microcomputers were used primarily for word processing and basic data storage. Some client data are maintained on the microcomputers, but these data are not well organised. On the microcomputers, each person kept their own files. These were either spreadsheet or word processing files, and the data were not usually shared among users. The primary data on clients and claims had been kept in paper format and stored in filing cabinets. Sharing this data among the staff in the small offices was not a problem because all employees and facilities were in close proximity to each other. Moreover, the office staff knew most of its clients personally; thus, inquiries were easily handled.
Each office was responsible for acquiring the software it needed. Fortunately, Jack Jones had insisted on one restriction, that the software is compatible among the offices. That is, each office used the same word processing software, spreadsheet software, and so on. The software used by Glic is mostly early versions of Microsoft Word and Microsoft Excel.

THE PROBLEMS OF CONSOLIDATION

One of the strengths of the Glic Insurance Agency was its personal, friendly service. This was partially made possible through the small office concept. After consolidation, it quickly became apparent that the larger, somewhat separated office space made the method of data and peripheral sharing described above inadequate. With offices on two floors, it was difficult for files to be shared among the office staff. Furthermore, with consolidation, the amount of data that needed to be maintained and shared was about twice the amount that was kept at each individual office. The additional data made it less likely that a client will be known to the person who happened to handle a client's request.

In the smaller offices, four computers had been adequate. In the consolidated office, a computer was needed for each employee. With fourteen employees, Glic is short of this ideal.
Most of the non-computerised data were kept in filing cabinets on the second floor. Frequently client files were taken to a broker's office for examination or update. Because of the inconvenience of replacing the files, they often remained for some time in the office of the person last using the file. Lack of easy accessibility also led to an increase in data duplication and reproduction costs. Brown had detected several instances of inconsistent data due to data redundancy. On several occasions, agents had updated their personal client files and had neglected to pass the changes to the administrators for inclusion in the office files.

Brown was concerned that the consolidation could change the personal, friendly reputation the company had acquired over time. He wanted an agency, which was very client oriented and where the office staff can quickly access data for any client with whom they were working. Brown did not know how the information problem could be solved or how much it would cost. After the expense of acquiring the agency and consolidating the offices, Glic's cash position could not support an expensive solution. Brown figured that immediately he could budget£40,000 to solve what he referred to as the "computer and data problem". Brown anticipated that further funds may be available in the next financial year.

FINDING SOLUTIONS

Nobody working for Glic knew how to solve the information flow problem. Therefore, Brown has contacted your group for advice on solving these problems. For your first meeting, Brown had drafted a brief outline of the problems and indicated their importance, as he perceived it. His outline is shown below.

a) Major: Data availability.

Data in filing cabinets are not readily available or shareable. Each computer has its own set of files. Office staff can only access files by physically using the machine on which they are kept or by storing data on diskettes.

b) Major: Printer conflict.

Each computer has an attached printer, but it is not always the type the user needs. The laser
printers are used for all external communication. These printers are attached to computers in the second-floor administration offices where the brokers find it difficult to get access to them. The administration staff does much of the draft copy work, but they do not have easy access to a dot matrix printer. Moving to a dot matrix printer is inconvenient for small print jobs.

c) Major: Remote sites.

How can brokers prepare a proposal at a customer's location? Moreover, can this be done without the broker having to enter the data separately for each insurance carrier?

d) Minor: Software sharing.

Software fits into two categories: the programs everyone uses frequently and the programs that a few people use occasionally. For software in the first category, a copy has been made available for each computer. For software in the second category, there are only one or two copies. Unused copies are supposed to be checked out and in from a central location; in reality that seldom happens.

e) Minor: Data protection.

There are a few files that are considered sensitive and should not be made available to all employees, specifically data about salaries and Glic 's financial position. This data is now kept on floppy disks that are kept locked in a filing cabinet.

f) Minor: Equipment.

There are not enough computers for each employee. Currently, the six brokers are sharing four microcomputers. The output devices are incapable of supporting the coloured output that they think will be effective for presentations to prospective business clients.
Solutions to these problems should cost no more than £40,000 (and preferably less.) An immediate solution, say within three to six months, is desired.

POSSIBLE ALTERNATIVES

Significant modernisation of Glic’s IT infrastructure is needed. An apparent solution to the current state of affairs is to install a Local Area Network. What is less obvious is the kind of network that may be required. There are a few basic alternatives worth considering: a Local Area Network with a dedicated or a non-dedicated file server, or a peer-to-peer Local Area Network. Current, cloud-based solutions and the utilisation of modern mobile platforms ought to be considered, too.

IMPLEMENTATION CONCERNS

Two things that many users of shared systems like a LAN or multi-user system soon discover are (1) that they were not well prepared to manage such a system and (2) that the hardware and installation costs were not the only costs incurred.

Before adopting a shared user environment, the impact of the proposed solutions on a number of areas needs to be assessed such as system administration, training, maintenance, software, communications speed, and communication with insurance carriers.

MAKE THE DECISIONS

You are hired by Bill Brown to recommend a solution to resolve Glic's current computer and data problems, in a way that is consistent with the company’s projected future expectations and development. Prepare a proposal and make sure that it includes solutions for the following questions.

SECTION A

1. Summarise the current situation, and identify the main problems. Prioritise those problems, and recommend a plan of action to address them.

2. Recommend two possible solutions to tackle the current situation, and develop a detailed proposal for their implementation. Analyse those solutions using a set of relevant criteria such as hardware and software, ease of installation, ease of use, ease of management, speed, security, and cost. (Additional criteria might also be used, provided that their significance is justified.) Draw logical and physical diagrams of the proposed systems. Compare the two solutions and recommend one of them; justify your final choice.

a. The two possible solutions should be substantially different from each other: E.g. a Windows based solution vs. a Linux based solution, an Ethernet Cable – Wired solution vs. a Wireless solution, a Cloud based solution vs. a Hybrid solution etc.

SECTION B

3. Assume that Bill Brown follows your recommendation. Make further recommendations advising him how he should address the issue of network/system administration.

4. The recommended solution from Section A2 introduces a number of points of failure. Discuss the implications of this situation and outline measures to minimise the effects of
this. Discuss the cost factors associated with your proposed solutions.

5. Conduct financial analysis to determine the anticipated return on the investment. Use two different financial analysis techniques in your analysis. Document any assumptions that you need to make to complete this analysis.

6. Recommend a solution with which Glic’s brokers will be able to prepare an insurance proposal at a customer's location. Also, make recommendations to solve the problem of different data formats used by different insurance carriers.

7. Bill Brown regards the successful exploitation of information technology as one of the keys to boosting Glic’s ability to compete with larger insurance companies. Develop a strategy for Glic’s future IT infrastructure, application and networking needs, and suggest ways in which information technology can be used in new and innovative ways.

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