Travelers 2012 Annual Report Download - page 26

Selected Product and Distribution Channel Information
The following table sets forth net written premiums for the Personal Insurance segment’s business
by product line for the periods indicated. For a description of the product lines referred to in the
following table, see ‘‘—Product Lines.’’ In addition, see ‘‘—Principal Markets and Methods of
Distribution’’ for a discussion of distribution channels for Personal Insurance’s product lines.
% of Total
(for the year ended December 31, in millions) 2012 2011 2010 2012
By product line:
Automobile ...................................... $3,642 $3,788 $3,772 48.0%
Homeowners and Other ............................. 3,952 3,957 3,795 52.0
Total Personal Insurance ........................... $7,594 $7,745 $7,567 100.0%
Principal Markets and Methods of Distribution
Personal Insurance products are distributed primarily through approximately 12,000 active
independent agents located throughout the United States, supported by personnel in 13 sales regions
and seven service centers. While the principal markets for Personal Insurance products continue to be
in states along the East Coast, California and Texas, the business continues to expand its geographic
presence across the United States.
In selecting new independent agencies to distribute its products, Personal Insurance considers,
among other attributes, each agency’s profitability, financial stability, staff experience and strategic fit
with the segment’s operating and marketing plans. Once an agency is appointed, Personal Insurance
carefully monitors its performance.
Agents can access the Company’s agency service portal for a number of resources including
customer service, marketing and claims management. In addition, agencies can choose to shift the
ongoing service responsibility for Personal Insurance’s customers to one of the Company’s five
Customer Care Centers, where the Company provides, on behalf of an agency, a comprehensive array
of customer service needs, including response to billing and coverage inquiries, and policy changes.
Approximately 1,800 agents take advantage of this service alternative.
Personal Insurance also distributes its products through additional channels, including corporations
that make the company’s product offerings available to their employees primarily through payroll
deduction, consumer associations and affinity groups. Personal Insurance handles the sales and service
for these programs either through a sponsoring independent agent or through two of the Company’s
call center locations. In addition, since 1995, the Company has had a marketing agreement with
GEICO to underwrite homeowners business for their auto customers.
In 2009, the Company began marketing its insurance products directly to consumers, largely
through online channels. The investment in the direct-to-consumer initiative generated modest
premium volume for Personal Insurance in recent years, which was consistent with the Company’s
expectations. However, the direct-to-consumer initiative, while intended to enhance the Company’s
long-term ability to compete successfully in a consumer-driven marketplace, is expected to remain
unprofitable for a number of years as the Company continues to develop, test and evaluate this
distribution channel.
Pricing and Underwriting
Personal Insurance has developed a product management methodology that integrates the
disciplines of underwriting, claim, actuarial and product development. This approach is designed to
maintain high quality underwriting discipline and pricing segmentation. Proprietary data accumulated
over many years is analyzed and Personal Insurance uses a variety of risk differentiation models to
14