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Stretch: Kwelani Insurance, from a claims backlog to cost to organization

You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.

Case timer

00:00

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

Kwelani Insurance, a South African car and home insurer, has a claims backlog. Customers wait about 21 working days for a decision, against about 7 working days at its main rivals. The exhibit shows the daily capacity of each step. The COO asks why, and how to fix it without raising cost.

Format note: Stretch case, interviewer-led. It starts as operations (steps 1 to 6), switches to cost at step 7 when the COO adds a 10 percent cost target, and switches to organization at step 9 when the interviewer shares the team structure.

2. Answers to clarifying questions

Give these answers only if the candidate asks. If they ask something not listed, give a sensible answer or say it does not matter here.

If asked: How many claims come in, and how many get decided each day?
Answer: About 650 new claims a working day. The team decides about 500 a day. The backlog is about 10,500 claims.
If asked: What does a claim go through?
Answer: Intake, document check, assessment, manager approval, and payment. The exhibit shows daily capacity for each step.
If asked: Are there limits on the fix?
Answer: The COO does not want to raise the department's cost, which is about ZAR 200 million a year.

3. The hypothesis a strong candidate states

Listen for an early, testable guess like this one. It does not need to match word for word.

Waits this long usually come from one bottleneck step, so my hypothesis is that one step decides fewer claims than arrive, and that fixing it is a matter of rules or staffing at that step rather than more people everywhere.

4. A model structure

Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.

Faster claims at lower cost
- Key: Part 1, operations: find the bottleneck and clear the backlog
- Part 2, cost: size the target and the cost per claim
- Part 3, organization: spans, layers, and who approves what

Exhibit 1

Reveal to candidate: when they ask for this data, say "Open Exhibit 1" (they press "Show exhibit 1" on their screen).

Claims decided per working day at each step (capacity)(claims per day)

So-what

Manager approval handles only 500 claims a day, fewer than the 650 that arrive, so the backlog grows every day.

5. The working, step by step

Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.

Step 1: Find the bottleneck
What a strong candidate does: Candidate: "A process runs at the speed of its slowest step. From the chart, that is manager approval:"
System capacity (claims a day): min(1,200; 700; 900; 500; 1,500) = 500
Step 2: Explain the wait
What a strong candidate does: Candidate: "By Little's Law, the wait is the backlog divided by the rate we finish claims. 10,500 claims at 500 a day is exactly the 21 days customers see:"
Average wait (working days): 10,500 ÷ 500 = 21
Step 3: It is getting worse
What a strong candidate does: Candidate: "And 650 arrive a day against 500 decided, so the backlog grows every working day by:"
Backlog growth (claims a day): 650 - 500 = 150
Step 4: Fix the rule, not the headcount
What a strong candidate does: Candidate: "Why does every claim need a manager?" Interviewer: "It is an old rule. About 70 percent of claims are under ZAR 20,000." Candidate: "Then let assessors approve claims under ZAR 20,000 within set limits, with random audits. Managers would see only 30 percent of claims, so approval could handle about 1,667 claims a day, and the new bottleneck becomes document check:"
System capacity after the rule change (claims a day): min(1,200; 700; 900; 500 ÷ 0.3; 1,500) = 700
Step 5: Clearing the backlog
What a strong candidate does: Candidate: "At 700 a day against 650 arriving, we clear only 50 a day, which would take 210 working days. Too slow." Interviewer: "Overtime could add 200 document checks a day for a while." Candidate: "Then we clear 250 a day, and the backlog is gone in:"
Days to clear the backlog with overtime: 10,500 ÷ (700 + 200 - 650) = 42
Step 6: The cost of the overtime
What a strong candidate does: Interviewer: "Overtime costs about ZAR 300 per extra claim checked." Candidate: "Over 42 working days at 200 extra checks a day, the one-off cost is about ZAR 2.5 million, a small price for cutting the wait from 21 days toward the market norm."
One-off overtime cost (ZAR): 200 × 42 × 300 = 2,520,000
Step 7: Switch to cost: the target
What a strong candidate does: Interviewer: "The COO now adds a second goal: cut the department's cost by 10 percent within a year." Candidate: "So the question changes from speed to cost. I will size the target, look at cost per claim, and then find where the money is. Ten percent of ZAR 200 million is:"
Annual cost target (ZAR): 200,000,000 × 0.1 = 20,000,000
Step 8: Cost per claim today
What a strong candidate does: Candidate: "With about 250 working days and 500 claims decided a day, each decided claim costs about:"
Cost per decided claim today (ZAR): 200,000,000 ÷ (500 × 250) = 1,600
Step 9: Switch to organization: spans
What a strong candidate does: Interviewer: "Here is the team structure." (The interviewer shares the people table: 500 handlers, 70 team leaders, 30 managers.) Candidate: "The question is now who does what. First, spans: each team leader looks after about seven handlers. Many operations teams run spans of about 10 to 12 for work like this."
Handlers per team leader: 500 ÷ 70 = 7.14
Step 10: Savings from wider spans
What a strong candidate does: Candidate: "At a span of 10, 500 handlers need 50 team leaders, 20 fewer. Most of those roles can close through people leaving, or by moving team leaders into handler vacancies as they open, so the number of handlers stays at 500. At ZAR 450,000 each, that saves:"
Saving from wider spans (ZAR a year): (70 - 500 ÷ 10) × 450,000 = 9,000,000
Step 11: Fewer approval managers
What a strong candidate does: Candidate: "After the rule change, managers approve only about 195 claims a day. Today 30 managers approve 500 a day, about 17 each, so 20 managers could approve about 333 a day, and 10 manager roles can go, saving ZAR 7 million a year." Interviewer: "Is there spare capacity for peaks?" Candidate: "Yes, about 138 approvals a day:"
Spare approval capacity with 20 managers (claims a day): 20 × 500 ÷ 30 - 650 × 0.3 = 138
Step 12: Cost per claim after the changes
What a strong candidate does: Candidate: "Spans save ZAR 9 million and fewer managers ZAR 7 million, so we are ZAR 4 million short. About ZAR 22.5 million of the budget is not staff cost. Is any of that easy to cut?" Interviewer: "Moving document upload online would save about ZAR 4 million a year of courier and printing cost." Candidate: "Then we reach ZAR 20 million in total, the full target. With 650 claims decided a day, cost per claim falls from ZAR 1,600 to about ZAR 1,108:"
Cost per decided claim after the changes (ZAR): (200,000,000 - (9,000,000 + 10 × 700,000 + 4,000,000)) ÷ (650 × 250) = 1,108

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

Change the approval rule, clear the backlog with about eight weeks of overtime, and fund the target through wider spans and fewer approval managers. First, manager approval decides only 500 claims a day against 650 arriving, which is why customers wait 21 days; letting assessors approve the 70 percent of claims under ZAR 20,000 lifts capacity to 700 a day. Second, 200 extra document checks a day clear the 10,500-claim backlog in about 42 working days, roughly eight weeks, for about ZAR 2.5 million one-off. Third, the department can meet its ZAR 20 million cost target: ZAR 9 million from team leader spans of 10, ZAR 7 million from 10 fewer approval managers, and ZAR 4 million from online documents, cutting cost per claim from ZAR 1,600 to about ZAR 1,108. The main risks are fraud on claims approved without a manager and morale during the change. Next steps: set approval limits and an audit sample, start overtime in document check this month, and plan role changes with the people affected.

Risks a strong answer names: Fraud or errors may rise on claims approved without a manager, so audits must be set before the rule changes; Staff morale may fall when team leader and manager roles are removed; Document check may still slow down in storm seasons, when claims rise sharply.

Next steps: Set approval limits for assessors and a random audit sample of about 5 percent of those claims; Start overtime in document check this month and track the backlog weekly; Plan the new team structure and offer moves into open handler roles before any redundancy.

Strong versus weak

A strong answer

Found the bottleneck from the chart, used Little's Law to explain the 21 days exactly, fixed a rule instead of adding people, checked where the next bottleneck would be, and carried the rule change into both the cost and the organization answers.

A weak answer

Proposed hiring more staff at every step, which breaks the cost limit, then treated the cost target as a separate question and suggested cutting handlers, which would make the backlog worse.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.