Travelers 2011 Annual Report Download - page 21

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 levels of coverage and service provided. A
company’s success in the competitive commercial insurance landscape is largely measured by its ability
to provide insurance and services, including claims handling and risk control 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 and 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 this
network with defined underwriting policies, a broad array of products, competitive prices and a highly
efficient, automated platform that significantly reduces the time period between quoting a price on a
policy and issuing that policy. 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 and casualty insurance
companies that 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 one key to success in this market.
In the National Accounts market, competition is based on price, product offerings, claim and loss
prevention services, managed care cost containment, risk management information systems and
collateral requirements. National Accounts competes with national property and casualty insurance
companies, as well as with 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. The residual market group competes for state
contracts to provide claims and policy management services. National Accounts services approximately
32% 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, along with 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. Each of these business groups has regional structures that allow them
to deliver personalized service and local knowledge to their customer base. Specialized agents and
brokers, including managing general agents and wholesale agents, supplement this strategy. In all of
these business groups, the competitive strategy typically is market leadership attained through focused
industry knowledge applied to insurance and risk needs.
FINANCIAL, PROFESSIONAL & INTERNATIONAL INSURANCE
The Financial, Professional & International Insurance segment includes surety and financial
liability coverages, which primarily use credit-based underwriting processes, as well as property and
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