Travelers 2009 Annual Report Download - page 72

agents and brokers are required to access separate business platforms to execute the sale of our
personal insurance or commercial insurance products. Should internet disruptions occur, or frustration
with our business platforms or distribution initiatives develop among our independent agents and
brokers, the resulting loss of business could materially and adversely affect our future business volume
and results of operations.
Our efforts to develop new products or expand in targeted markets may not be successful and
may create enhanced risks.
A number of our recent and planned business initiatives involve developing new products or
expanding existing products in targeted markets. This includes the following efforts, from time to time,
to protect or grow market share:
• We may develop products that insure risks we have not previously insured or contain new
coverage or coverage terms.
• We may refine our underwriting processes. For example, in certain of our businesses in recent
years, we have substantially increased the volume of business that flows through our automated
underwriting and pricing systems.
• We may seek to expand distribution channels, such as our efforts to develop a
direct-to-consumer platform in Personal Insurance.
• We may focus on geographic markets within or outside of the United States where we have had
relatively little or no market share.
We may not be successful in introducing new products or expanding in targeted markets and, even
if we are successful, these efforts may create enhanced risks. Among other risks:
• Demand for new products or in new markets may not meet our expectations.
• To the extent we are able to market new products or expand in new markets, our risk exposures
may change, and the data and models we use to manage such exposures may not be as
sophisticated as those we use in existing markets or with existing products. This, in turn, could
lead to losses in excess of our expectations.
• Models underlying automated underwriting and pricing decisions may not be effective.
• Efforts to develop new products or markets have the potential to create or increase distribution
channel conflict, such as described above under ‘‘—Disruptions to our relationships with our
independent agents and brokers could adversely affect us.’’
• In connection with the conversion of existing policyholders to a new product, some
policyholders’ pricing may increase, while the pricing for other policyholders may decrease, the
net impact of which could negatively impact retention and margins.
• To develop new products or markets, we may need to make substantial capital and operating
expenditures, which may also negatively impact results in the near term.
If our efforts to develop new products or expand in targeted markets are not successful, our results
could be materially and adversely affected.
Our business success and profitability depend, in part, on effective information technology systems
and on continuing to develop and implement improvements in technology. We depend in large part
on our technology systems for conducting business and processing claims, and thus our business success
is dependent on maintaining the effectiveness of existing technology systems and on continuing to
develop and enhance technology systems that support our business processes and strategic initiatives in
a cost and resource efficient manner. Some system development projects are long-term in nature, may
negatively impact our expense ratios as we invest in the projects and may cost more than we expect to
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