Question

An insurance company was conducting performance analysis of their claims handling processes and process cycle time was one of their concerns. They collected a sample data of the process cycle time across a number of different claims handling processes over the past six months. However, the data followed a (non-normal) multimodal distribution instead of a normal distribution. Why? Explain what could be the reason(s) behind this?

The company then focused on the CTP insurance claims handling pro- cesses and a sample data of the process cycle time of about 500 CTP in- surance claims from the past six months. Such data followed a normal dis- tribution characterised by mean=20.5 days and standard deviation=5.25 days. Answer the following questions based on the above information.

(a) Given the sample data, how often the cycle time of a CTP insurance claim process could fall within the range [15.25, 20.75] days? Why?

(b) If the expected mean cycle time of CTP insurance claims is 20.2 days, did the company meet this target in the past six months? Conduct an appropriate statistic test to draw conclusion.

Answer 1

The time required to process the cycle depends on the type of case. Few cases get processed very quickly while others take time. So, there would be at least two peaks in the curve. One for the fast processing claims and another for slow processing case. Note that there might be more than 2 peaks for some special cases as well. So, the data must be multimodal and not normal.

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