This is my best guess at doing this WITHOUT A CURSOR.

I combined your two derived tables into one by using the LAG function and removed unnecessary conditions in your CASE expression.

Insert into @tempRY (ryear, rmonth, tblclaimstatusactionID,tbllineID, tbllinestatusID, companyname, ronumber, line, cstatus, LastUpdatedBy, name, dStarted, Dfinsished, Duration_sec, RY)

SELECT

DATEPART(YYYY, derivedtbl_1.LastUpdatedOn) as Year,

DATEPART(MM, derivedtbl_1.LastUpdatedOn) as Month,

derivedtbl_1.tblclaimstatusactionID,

derivedtbl_1.tbllineID,

derivedtbl_1.tbllinestatusId,

tblcustomer.companyname,

tblro.ronumber,

tblline.line,

tbllinestatus.status,

derivedtbl_1.LastUpdatedBy,

.name,

derivedtbl_1.prevLastUpdatedOn AS Started,

derivedtbl_1.LastUpdatedOn as Finished,

DATEDIFF(ss, derivedtbl_1.prevLastUpdatedOn, derivedtbl_1.LastupdatedOn) AS Duration_sec,

CASE

WHEN DATEDIFF(ss, derivedtbl_1.prevLastUpdatedOn, derivedtbl_1.LastupdatedOn) <= 899 Then 'OK'

WHEN DATEDIFF(ss, derivedtbl_2.LastUpdatedOn, derivedtbl_1.LastupdatedOn) <=1199 Then 'Y'

WHEN derivedtbl_1.tbllinestatusId <> 78 Then 'R'

ELSE 'OK'

END AS RY

FROM

(

SELECT tblclaimstatusactionID, tbllineID, tbllinestatusId, LastUpdatedBy, LastUpdatedOn, LAG(LastUpdatedOn) OVER( PARTITION BY LastUpdatedBy ORDER BY LastUpdatedOn) prevLastUpdateOn

FROM tblclaimstatusaction

WHERE tbllinestatusId <> 23

AND LastUpdatedOn > DATEADD(MONTH, -6, GETDATE())

) AS derivedtbl_1

ON .tbluserID = derivedtbl_1.LastUpdatedBy

INNER JOIN tbllinestatus

ON derivedtbl_1.tbllinestatusId = tbllinestatus.tbllinestatusID

INNER JOIN tblline

ON derivedtbl_1.tbllineID = tblline.tbllineID

INNER JOIN tblro

ON tblline.tblroID = tblro.tblroID

INNER JOIN tblcustomer

ON tblro.tblcustomerID = tblcustomer.tblcustomerID

Remember that CASE WHEN clauses are evaluated in order, so you don't have to test for things that can be ruled out by previous WHEN clauses. For instance your first test is whether the difference is <= 899. If that test fails, you know that the difference has to be >= 900, so you don't need to test for it.

Drew