How many claims reps should lsi employ next year

Assignment Help Financial Management

Reference no: EM131971096

Lone Star Insurance Co (LSI) specializes in automobile insurance business. The management of its claims department is preparing operating plans for the next year, particularly the ideal staffing level for claims representatives (who are called "claims reps" for short).

Based on the past and the planned future sales of insurance policies, LSI forecasts the new claims arrival rate to be about 10,000 claims per quarter during the next four quarters (i.e. one year). The claims department has determined that a claims rep reeds to perform four hours of claims handling work per claim to close a claim.

The average age of a claim at closing is estimated to be months (i.e. two quarters). Studies also indicate that a claims rep can effectively perform (after adjusting for lunch and other breaks, administrative meetings, etc.) about 400 hours of claims handling work per quarter. The company desires to achieve a claims' closing rate that is equal to the new claims arrival rate (i.e., 10,000 claims per quarter).

a) What average level of pending claims (i.e. number of open claims) may LSI expect at any point in time during the coming year? Explain. (Please note that this is an ongoing, not a startup, operation.)

b) How many claims reps should LSI employ next year? Explain. What caseload (average number of pending claims per claims rep) will the claims reps experience?

Reference no: EM131971096

Questions Cloud

Should you buy the stock and why : You only expect this rate to continue for 5 years. Then the growth should taper down to 3% per year thereafter. Should you buy the stock? Why?

Estimate what price of car can you afford : You are looking to buy a car. You can afford $610 in monthly payments for five years. In addition to the loan, you can make a $710 down payment.

Create a blog from the information you gathered : Based on the Current Event paper that you are doing this week, create a Blog from the information you gathered for the Current Event assignment.

Abdominal perineal resection and notes : The nurse is assessing the perineal wound in a client who has returned from the operating room following an abdominal perineal resection and notes

How many claims reps should lsi employ next year : How many claims reps should LSI employ next year? Explain. What caseload (average number of pending claims per claims rep) will the claims reps experience?

Why are individuals with b cell deficiencies : Why are individuals with B cell deficiencies are more prone to bacterial infections? A detailed explanation is preferred. Please respond shortly!

What is the after-tax operating cash flow for given year : You are evaluating a potential purchase of several light-duty trucks. The initial cost of the trucks will be $194,000. The trucks fall in the MACRS 5-year class

Determine what are the capitalized costs and which is better : Design B requires 4,000,000 in initial cost. Yearly cost of 600,000 and major upgrades every ten years of 2,000,000.

Inhaler and a beclomethasone inhaler : What would be patient teaching for a client with albuterol inhaler and a beclomethasone inhaler?

User Account

All Pages