Travelers 2011 Annual Report Download - page 72

important part of our business is written through less than a dozen such intermediaries. Further, there
has been a trend of increased consolidation by agents and brokers, which could impact our
relationships with and fees paid to some agents and brokers. Loss of all or a substantial portion of the
business provided through such agents and brokers could materially and adversely affect our future
business volume and results of operations.
We may also seek to develop new product distribution channels, including our current efforts to
establish a direct-to-consumer platform in the Personal Insurance segment. In addition, agents and
brokers may create alternate distribution channels for commercial business, such as insurance
exchanges, that may adversely impact product differentiation and pricing. Our or their efforts with
respect to alternate distribution channels could adversely impact our business relationship with
independent agents and brokers who currently market our products, resulting in a lower volume of
business generated from these sources.
We rely on internet applications for the marketing and sale of certain of our products, and we may
increasingly rely on internet applications and toll-free numbers for distribution. In some instances, our
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. See ‘‘If we experience difficulties with technology, data security and/or
outsourcing relationships, our ability to conduct our business could be negatively impacted’’ below.
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.’’
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