Travelers 2008 Annual Report Download - page 22

Competition
The insurance industry is represented in the commercial marketplace by many insurance
companies of varying size as well as other entities offering risk alternatives such as self-insured
retentions or captive programs. Market competition works within the insurance regulatory framework to
set the price charged for insurance products and the level of service provided. A company’s success in
the competitive commercial insurance landscape is largely measured by its ability to provide insurance
and services at a price and on terms that are reasonable and acceptable to the customer, as well as its
ability to retain existing customers and to attract new customers.
Select Accounts business is typically written through independent agents and, to a lesser extent,
regional brokers and direct writers. Both national and regional property casualty insurance companies
compete in the Select Accounts market which generally comprises lower hazard, ‘‘main street’’ business
customers. Risks are underwritten and priced using standard industry practices and a combination of
proprietary and standard industry product offerings. Competition in this market is primarily based on
product offerings, service levels, ease of doing business and price. Select Accounts has established a
strong marketing relationship with its distribution network and has provided it with defined
underwriting policies, a broad array of products, competitive prices and an efficient automated
environment. In addition, the Company has established centralized service centers to help agents
perform many service functions, in return for a fee.
Commercial Accounts business has historically been principally written through independent agents
and brokers. Competitors in this market are primarily national property casualty insurance companies
willing to write most classes of business using traditional products and pricing, and regional insurance
companies. Companies compete based on product offerings, service levels, price and claim and loss
prevention services. Efficiency through automation and rapid response time to customer needs is key to
success in this market.
The National Accounts group is comprised of three business units:
• National Accounts business is typically written through national brokers and, to a lesser extent,
regional brokers. Insurance companies compete in this market based on price, product offerings,
claim and loss prevention services, managed care cost containment and risk management
information systems. National Accounts also offers a large network of localized claim service
centers which allows National Accounts the flexibility to more quickly respond to the needs of its
customers.
• Discover Re competes with traditional providers of commercial insurance coverages, as well as
other underwriters of property and casualty insurance in the alternative risk transfer market,
such as risk retention groups, self-insurance plans, captives managed by others, and a variety of
other risk-financing vehicles and mechanisms.
• National Accounts’ residual market business competes for state contracts to provide claims and
policy management services. These contracts, which generally have three-year terms, are selected
by state agencies through a bid process based on the quality of service and price. National
Accounts services approximately 33% of the total workers’ compensation assigned risk market,
making the Company one of the largest servicing carriers in the industry.
There are several other business groups in Business Insurance that compete in focused target
markets. Each of these markets is different and requires unique combinations of industry knowledge,
customized coverage, specialized risk control and loss handling services, and partnerships with agents
and brokers that also focus on these markets. Some of these business groups compete with national
carriers with similarly dedicated underwriting and marketing groups, whereas others compete with
smaller regional companies. In either case, these businesses have regional structures that allow them to
deliver personalized service and local knowledge to their customer base. Specialized agents and
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