Travelers 2010 Annual Report Download - page 67

In addition, the potential passage of new legislation designed to expand the right to sue, to remove
limitations on recovery, to extend the statutes of limitations or otherwise to repeal or weaken tort
reforms could have an adverse impact on our business.
The effects of these and other unforeseen emerging claim and coverage issues are extremely hard
to predict and could harm our business and materially and adversely affect our results of operations.
The intense competition that we face could harm our ability to maintain or increase our business
volumes and our profitability. The property and casualty insurance industry is highly competitive, and
we believe that it will remain highly competitive for the foreseeable future. We compete with both
domestic and foreign insurers, a number of which have experienced financial difficulties in recent
periods. Competitors that are experiencing financial difficulties may offer products at prices and on
terms that are not consistent with our economic standards in an effort to maintain or increase their
business. The property and casualty insurance industry has historically been cyclical, with periods
characterized by intense price competition and less restrictive underwriting standards followed by
periods of higher premium rates and more selective underwriting standards. The competitive
environment in which we operate could also be impacted by current general economic conditions,
which could reduce the volume of business available to us as well as to our competitors. In addition,
the competitive environment could be impacted by changes in customer preferences, including customer
demand for direct distribution channels. See ‘‘Item 7—Management’s Discussion and Analysis of
Financial Condition and Results of Operation—Outlook.’’
In recent years, many independent personal insurance agents have begun to utilize price
comparison rating technology, sometimes referred to as ‘‘comparative raters,’’ as a cost-efficient means
of obtaining quotes from multiple companies. Comparative raters also tend to put additional focus on
price over other competitive criteria. Additionally, there is potential for similar technology to be used
to access comparative rates for small commercial business. Agents and brokers may also create
alternate distribution channels for commercial business, such as insurance exchanges, that may
adversely impact product differentiation and pricing.
Our competitive position is based on many factors, including but not limited to our:
• ability to retain existing customers, to obtain new business and to profitably price our business;
• agent, broker and client relationships;
• speed of claims payment;
• premiums charged, contract terms and conditions, products and services offered (including the
ability to design customized programs);
• ability to provide our products and services in a cost effective manner;
• perceived overall financial strength and corresponding ratings assigned by independent rating
agencies;
• reputation, experience and qualifications of employees;
• geographic scope of business;
• local presence; and
• ability to keep pace relative to our competitors with changes in technology and information
systems.
We may have difficulty in continuing to compete successfully on any of these bases in the future. If
competition limits our ability to retain existing business or write new business at adequate rates, our
results of operations could be materially and adversely affected. See ‘‘Competition’’ sections of the
discussion on business segments in ‘‘Item 1—Business.’’
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