Travelers 2014 Annual Report Download - page 68

Table of Contents
The inability of our insurance subsidiaries to pay dividends to our holding company in an amount sufficient to meet our debt service
obligations and other cash requirements could harm our ability to meet our obligations, to pay future shareholder dividends and to make share
repurchases.
Disruptions to our relationships with our independent agents and brokers could adversely affect us. We market our insurance products
primarily through independent agents and brokers. An 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, and/or otherwise negatively impact the pricing or distribution of our products. Agents and brokers may increasingly compete
with us to the extent that markets increasingly provide them with direct access to providers of capital seeking exposure to insurance risk. See also
"The intense competition that we face could harm our ability to maintain or increase our business volumes and our profitability." In all of the
foregoing situations, 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 products or distribution channels, including our establishment of a direct
- to - consumer platform in the
Personal Insurance segment and our new Quantum 2.0 auto product. 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. Access to greater levels of data
and increased utilization of technology by agents and brokers may also impact our relationship with them and our competitive position. Our efforts
or their efforts with respect to new products or alternate distribution channels, as well as changes in the way agents and brokers utilize data and
technology, 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, any 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.
Customers in the past have brought claims against us for the actions of our agents. Even with proper controls in place, actual or alleged errors
or inaccuracies by our agents could result in our involvement in disputes, litigation or regulatory actions related to actions taken or not taken by
our agents.
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, contain new coverage or coverage terms or contain
different commission terms. For example, in response to the competitive environment in personal auto insurance, we have rolled out
a new product called Quantum Auto 2.0 that is intended to be more competitively
- priced. See "Item 1—Business—Personal
Insurance—Competition."
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