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Vasquez-Morrell Assurance specializes in insuring [#permalink]
28 Jul 2011, 04:58
86% (02:04) correct
14% (01:56) wrong based on 136 sessions
Vasquez-Morrell Assurance specializes in insuring manufacturers. Whenever a policyholder makes a claim, a claims adjuster determines the amount that Vasquez-Morrell is obligated to pay. Vasquez-Morrell is cutting its staff of claims adjusters by 15 percent. To ensure that the company’s ability to handle claims promptly is affected as little as possible by the staff cuts, consultants recommend that Vasquez-Morrell lay off those adjusters who now take longest, on average, to complete work on claims assigned to them.
Which of the following, if true, most seriously calls into question the consultants’ criterion for selecting the staff to be laid off?
(A) If the time that Vasquez-Morrell takes to settle claims increases significantly, it could lose business to other insurers. (B) Supervisors at Vasquez-Morrell tend to assign the most complex claims to the most capable adjusters. (C) At Vasquez-Morrell, no insurance payments are made until a claims adjuster has reached a final determination on the claim. (D) There are no positions at Vasquez-Morrell to which staff currently employed as claims adjusters could be reassigned. (E) The premiums that Vasquez-Morrell currently charges are no higher than those charged for similar coverage by competitors.
The assurance company needs to layoff workers, but wants to continue to provide high level service. It hires consultants to determine whom to lay off. The consultants say lay off adjusters who take the longest to complete their work on claims.
B is the answer because one can imagine a situation where the most complex claims will take longer than really simple claims. If your complex claims are being handled by your best people and they take longer, then the consultants suggestion will result in you laying off your best people. That's not ideal at all.
C doesn't really call into question the consultants recommendation does it? I mean, look, it says that claims will not be paid until the adjuster makes final determination. That seems to support the idea that hey, this company really needs to get rid of people who take too long on claims right?
Another way to think about it is that you have a group of people working on claims. They all having varying speeds of completing their work. Now a bunch of them are going to be laid off. That means that the remaining workers will have to pick up the work of the laid off workers. In this situation knowing that your remaining workers are going to have to take the work of the laid off workers, would you rather lay off the slow people or the fast people? Well, you'd lay off the slow people right because if you gave the slow people even more work, they'd take even longer to complete the claims whereas if you gave the fast people the slow people's work, they'd be better able to get the claims done quickly.
Thus, C supports the consultants conclusion and is the incorrect answer.
A claim is paid after the adjuster determines the final amount-> This is not disputed, however, the time taken to reach the decision is being considered in the question. Here C does not fit the bill B is the answer