60 Minutes in Personal Insurance: Opportunities in a Changing Marketplace

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Text, Wednesdays with Woodward (registered trademark) Webinar Series

Joan Woodward appears on a video call. Text, Travelers Institute (registered trademark). Travelers logo.

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JOAN WOODWARD: Good afternoon. And thank you for joining us. I'm Joan Woodward, President of the Travelers Institute, the public policy division and educational arm of Travelers. Welcome to Wednesdays with Woodward, a webinar series we developed where we convene leading experts for conversations about today's biggest challenges, both professional and personal.

So, before we get started, I'd like to share our disclaimer about today's webinar.

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Slide, Text, About Travelers Institute (registered trademark) Webinars. The Wednesdays with Woodward (registered trademark) educational webinar series is presented by the Travelers Institute, the public policy division of Travelers. This program is offered for informational and educational purposes only. You should consult with your financial, legal, insurance or other advisors about any practices suggested by this program. Please note that this session is being recorded and may be used as Travelers deems appropriate.

Slide, Text, 60 Minutes in Personal Insurance: Opportunities in a Changing Marketplace. Logos, Metro Hartford Alliance, Trusted Choice Independent Insurance Agents, Travelers Institute, S I A A, American Property Casualty Insurance Association, and UCONN School of Business

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And a big thanks to our partners today, Trusted Choice, SIAA, APCIA, MetroHartford Alliance, the Master's in FinTech Program at the University of Connecticut School of Business. So today, we're going to talk about the evolving personal insurance marketplace from supply chain disruptions, increasing inflation, to changing customer and employee expectations.

The auto and home insurance industries are rapidly changing, and you can see it every day in your business. It's imperative that insurance carriers and agents alike adapt-- and quickly. Joining us today are two Travelers personal insurance leaders. Who will provide insights into how carriers like us, and agents like you, can successfully adapt to these changes, and to partner to take advantage of significant opportunities that we see because of these changing conditions.

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Slide, Speakers, three pictures with names and titles

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So first up, we're going to hear from Bill Zielinski. Bill is our Senior Vice President of Product Management and Analytics for Personal Insurance at Travelers. Bill joined Travelers in 2010, and today is responsible for day-to-day profit and growth, managing national underwriting and product management across all PI product lines. Bill is stepping in for Michael Klein, who had an unavoidable last-minute schedule change. So, Bill, thank you for jumping in today.

And then next up, we're going to hear from Loree Toedman. She's the Senior Vice President of Personal Insurance, Field Sales at Travelers. So Loree oversees eight regional sales teams and supports 13,000 independent agents. She brings 20 years of experience in field sales management and another 10 in direct agency experience. So, these two leaders really are at the top of their game at Travelers in the personal lines business, and they see every single day how they can help you, and we're really excited to hear from them. So, Bill, the virtual floor is yours.

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Bill appears on the video call. Slide, Industry Performance, a bar graph representing sales from 2012 to 2021, with a gradual trend upwards

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BILL ZIELINSKI: Excellent. Thank you, Joan. Really excited to be here. So, with that, let's jump right into it and begin with an overview of the personal insurance industry performance. To get everybody acclimated to the slide, the blue bars that you see represent written premium, and the red line that you see represents combined ratio, which is a standard industry measure for profitability.

If I draw your attention all the way to the right-hand side, you'll see that $377.7 billion was the size of the personal insurance marketplace in 2021. Pretty healthy size, representing about half or actually a little bit more than half of the total property and casualty market. And over a five-year period, that represents a 4.4% compound annual growth.

Now, turning our attention to the red line, combined ratio, the results have been a little bit more modeled. So, you can see over a 10-year average, we averaged 101 as an industry, meaning we paid out one more dollar than every 100 we took in in premium. Now, 2018, 2019 and 2020 were very profitable years for the industry, with 2020 being influenced pretty significantly by the pandemic, which resulted in lower auto losses.

The number that jumps out of the page perhaps is that 105 combined ratio in 2021, and we're certainly going to spend some time on that in a minute. But before we do, from a Travelers' perspective, in 2021 we ended with $12.5 billion in written premium, that's up 10% year-over-year and ended with a combined ratio of 97. So, by both measures of scale, production and profitability, we outperformed the industry.

And to put a finer point on that, we outperformed the industry from a profitability standpoint nine out of the last 10 years. Now, as we look forward and drive into that 105 for 2021, we'll take a look in a second at what's driving that underneath. So next slide, please.

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Slide, Auto Loss Cost Pressures, two bar graphs and two line graphs

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So, as we all know, you probably have experienced it personally, cars are returning to the road. And, as cars are returning to the road, unfortunately, accidents are coming with them. As an industry, I think the term that's most frequently referenced is a “return to normal” accident frequency is what we're feeling. Now, that is being compounded by raising inflation, which is driving severity, which is the cost for each accident.

What you have here is a couple of key metrics. We'll start in the top left. For those of you who have recently bought or sold a used car, you have probably felt this, there's been a 38% increase in the price of used cars since 2019. When you look to the right of that, new car inventory has dropped nearly 90% in that same time period. So still demand for cars, lower new car inventory, pushing up prices in the used car market.

The bottom left, bodywork CPI, and think of that as parts and labor for repairs, that's up 12% in 2021 alone. And then finally, bottom right, medical care services. Think of this as a large component of the liability losses in auto, costs are up 9.5% for the last two years. So again, the industry is seeing elevation across the board from a severity standpoint.

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Slide, Challenges in Property, a U S map showing weather events and natural disasters

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So that's the reality that we're seeing in the auto market. And as we look at property, property is not immune to those inflationary drivers. Many of the same dynamics come into play across labor and materials. In addition, weather continues to be a really big part of the property story. Yes, weather leads to volatility, meaning more or less weather in a given year, but in more recent years, we've seen a consistent elevation in loss.

This is a view of 2021. What we've plotted here are the 20 separate $1 billion loss weather events that occurred in 2021. You can see on the left-hand side, wildfire in the West. You have hurricanes in the Gulf Coast. Tornadoes, severe weather in the central part of the country. So, pretty significant weather.

Now, there are some white spaces there, but that doesn't mean that weather wasn't happening, it just happened at a scale that was below a $1 billion loss. There are actually 50 other weather events that were tracked. In total, the industry lost $75 billion through weather events in 2021. Very significant and basically on par with the prior year.

So, for many of us deep in the industry, we know this story pretty well. But as we move forward, we felt it was very important for our customers to understand that as well.

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Slide, Travelers Response, two illustrations titled: The many factors driving home insurance rates

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So, if we take a look at the next slide, we feel a real responsibility and a value quite honestly, to providing our agents with the tools, and our customers with the education to understand what's happening in the market.

And here you can see two infographics that we put together, one for property and one for auto, that attempt to succinctly convey the drivers of those increased costs that we're seeing. Both visuals are really designed to give you a quick view of the pressures in both of those lines. The feedback that we're getting is these are very helpful resources as our agent partners talk to customers about premium increases, and as our customers get the renewals.

So yes, it is about education, but we also see this as a moment to re-sell versus re-market, thank you to Loree for that. The dynamics that we see are environmental, meaning it's not specific to one company. In addition to that education, we think offering coverage reviews, making sure that customers are adequately protected in these unprecedented conditions, are really important. Making sure that there's a right coverage from an auto and a property standpoint and otherwise. We call this really providing total account solutions. It's about having the right protection for customers, which also can help you to take advantage of multi-policy discounts.

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Slide, pictures of people working on smartphones, laptops and tablets

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So, moving forward, the industry and we as Travelers are responding to loss-cost pressures. But in addition, we're really focused on building capability. After all, building capability is how you generate sustainable competitive advantages. And to us, telematics and digital are really core parts of how we position ourselves for today and tomorrow.

So, with that, let's jump into telematics.

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Slide, Consumer Interest in Telematics, statistics

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So, I'll start with, I think we all have our personal preferences, beliefs, maybe even hypotheses, around certain things, but nothing is more clarifying than understanding customer needs than talking to your customers directly. We feel this is extremely important and this is really where we started our journey from a telematics standpoint.

So, what did we learn? Well, first, the interest in telematics is broad-based, that top graphic, 9 out of 10 drivers have an interest in paying premium based on how far and how well they drive. So broad-based interest is point number one.

Point number two, there are some differences around preferences underneath that. So, from a monitoring standpoint, when customers think about understanding how well do I drive, 4 out of 10 will say you can monitor me all the time. Another 4 out of 10 will say, a brief period, please. So, a little difference of opinion there.

Now, once you get further into that, how is the driving monitored? Five out of 10 would prefer that monitoring to occur through the car, be it software, be it a device. Another 4 out of 10 would say mobile device. So, these were really important inputs to help shape our approach. In addition, it's really valuable to understand where the fleet is-- cars from a capability standpoint. And one very salient data point is that in 2023 it's estimated that 1 out of every 3 cars on the road will be telematics-ready, meaning, they will be collecting information about driving, about the environment, and be able to share that.

So, with that, let's jump into what we've seen to date.

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Slide, IntelliDrive (registered trademark) Program Progress, a line graph representing program adoption from May 2017 to December 2021, with the line trending sharply upwards

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So, since we launched IntelliDrive mobile in May of 2017, we've seen just an incredible uptake. So, the adoption, so the number of new customers who subscribe to the telematics program, has improved by nearly 50%. And we think that tells us that our offering is resonating, it is adding value to our customers and our distribution partners feel the same way. So really just incredible results, but we're not satisfied.

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Slide, Travelers Telematics Offerings, four graphics labeled by year

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So, as we look forward to our roadmap, it's really all about enabling that customer choice of how customers want to engage with telematics. So again, in 2017, we initially launched our IntelliDrive mobile app, and then we had a major refresh in 2020, where we really significantly improved the experience within the mobile app, which put us at a 4.5 rating in the Apple Store. We added distraction and we increased the sign-up discount, creating momentum.

Next, we released digital auto discount, which coupled IntelliDrive with paperless and self-service options that we have for a bigger discount for customers, again increasing interest. And we also began a pilot for IntelliDrivePlus, which is our continuous monitoring offering. If you remember just from a second ago, 4 out of 10 really prefer that continuous monitoring from a customer standpoint.

And then we're really excited that later this year we'll be experimenting or piloting with a new connected car offering to get that data directly from the car. Again, think 5 out of 10 would prefer that, and that'll allow us to get that experience from a driving standpoint directly at point of sale. So, we're super-excited about the opportunities we have in front of us from a telematics roadmap standpoint.

Now, all that said, of course property insurance is a really important part of the PI landscape, and in particular, for Travelers.

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Slide, Property Strategies, four pictures of homes and neighborhoods

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So, if we move forward. In property, we're really focused on two things: one, resilience, and two, risk evaluation. And here we have a couple of vignettes to show that for you. From a resilience standpoint, we are actively working with the FORTIFIED program, which is partner-- in partnership with IBHS, to better understand construction methods and standards, so that homes can stand up better to weather, right? It's all about resiliency.

Hurricane wind-mitigation in the South was a real big initial focal point, and I think as an organization, as a group, we'll start to turn our attention to other places, perhaps like California with wildfire to help shape regulation codes, understand materials, defensible space, et cetera.

Top right, Wildfire Defense Systems. We've contracted with WDS in California and Colorado to protect homes at risk during wildfires, which we know is so very important. And we've seen a lot of success of that program already.

The bottom two examples that I'd like to call out relate to risk evaluation. We have a partnership with HOVER, where we give customers the option to do self-inspections, external self-inspections of their home when purchasing a new policy and provide similar capability for our insureds during the claim process.

And then finally, one that we're really excited about is the ability to leverage aerial imagery in combination with artificial intelligence to get better insights into the home. For those of you who have recently purchased a homeowner’s policy, sometimes maybe it feels like the questions insurers ask can feel a little obtuse, you're not sure exactly how to answer it. Do I have a hipped roof or not?

These questions are often just proxies for the real risk factors. How big is your roof? Are there trees around? What's the condition? When you think about aerial imagery in combination with artificial intelligence, we'll be able to get to the ground truth of some of those risk characteristics and do that with less customer effort.

So hopefully, that gives you good context on the PI industry trends and Travelers' response. With that, I'm really happy to pass it over to my partner, Loree Toedman, to talk about the independent agent channel and really what we're learning from consumers.

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Loree appears on the call. Slide, Market Share by Distribution Channel, a chart showing percentages

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LOREE TOEDMAN: Great. Thanks so much, Bill. I really appreciate the overview on the industry, the pressures that were experienced in loss costs on both auto and home, and quite frankly, what Travelers is out there doing about it.

So, I'm going to jump into a little bit deeper dive on the independent agency channel, and I wanted to start with the view of market share. It's a little bit different than what Bill was showing you. I guess a little bit of a spoiler alert here, I'll tell you, the independent agency channel is doing really, really well right now

Although we see strength right now, we do believe there's opportunities to continue to evolve. And I'll talk a little bit more about that in a few minutes. But if you look at the total industry here, we break down market share by the captive agency channel, the independent agency channel and the direct-to-consumer.

So, if you look at this across from 2016 on the left side, 2021 in the middle, to an estimate of where we think market share will lie in 2023, I'm going to take you right to the middle, where the dotted red line is. So, the great news is for the first time ever, the independent agency channel has more market share than any other channel. As you can see, at the end of 2021 the captives have continued to decline in market share, with only 35.3% share, and projected to continue to lose share. The independent agency channel has been pretty steady with slight gains year after year after year, and I'll dive down in a second about how that looks different in the auto and home.

And then as you can see, the direct channel has continued to grow really on the backs of their automobile growth. And again, looking to be about 30% by the end of 2023. So, if I break this down by auto, what you'll see is the continued decline of the captives, a much steeper incline for the direct-to-consumer, they picked up a lot of share. Actually, surpassed the independent agency channel in 2018 with more market share in the direct-to-consumer than in the independent agency channel.

But if you flip it, and you look at the property marketplace, again, you see the continuous decline of the captives. Direct has actually struggled a little bit on the property side, with less than 20% of the market share, while the independent agency channel's really been the recipient of all that market share gain. And I think a lot of that has to do with the rising premiums. People certainly want to turn to a trusted advisor to understand how to insure their greatest asset in life.

So, all in all, feel really, really strong about where the market share lies. We think independent agents are going to continue to grow it. And we'll work with you to help evolve and make sure that that continues to happen.

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Slide, Market Dynamics, a table listing independent agents

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So, moving forward, I thought I'd break down a little bit about the market dynamics again, reiterating that the independent agency channel is thriving. If you think back to the early days when the independent agency channel was formed, it was the first-choice model. And I'd have a pretty strong argument that it still is the choice model. I think both customers and carriers alike see it as a terrific way for the consumer to get to a company and actually get choice.

So, as I take you across this slide from left to right, not only are we seeing mergers and acquisitions, but we're seeing independent agents actually invest in themselves. You can see mergers and acquisitions were up 30% in 2021. So again, I think folks see the investment of staying in the independent agency channel and getting even larger.

From a big brand standpoint, you can see Allstate's investment in an independent agency company in National General, Liberty continues to make investments in independent agency companies with their latest acquisition of State Auto. Farmers’ acquisition of MetLife, and State Farm for the first time in the history of State Farm, they actually made a very small acquisition of a nonstandard auto company in GAINSCO. So, again, I think the big brands are seeing the value in having an independent agency distribution channel.

When you look at adjacent ecosystems, we're seeing a lot of our larger agencies, those that have significant auto flow, those that have flow from real estate relationships, they're embedding themselves in the actual buying process. So, whether you're buying a home or a new vehicle, some of our largest partners now are embedding themselves so, at the time of sale, you can actually right then and there buy your insurance as well.

When you look at InsurTechs, more evidence that the independent agency channel is thriving, as InsurTechs, with their ease of doing business and their flexibility with technology, they came on the front and then quickly realized that they'd hit their headroom, that they needed to have the expertise in distribution that the independent agency channel brings to them.

And then lastly, just like we saw on the far left, we've seen mergers and acquisitions within the agency management system world. We're really down to a couple significant players that are out there investing in real-time capabilities for independent agents to sell insurance.

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Slide, Consumers Are Digital, statistics and infographic comparing businesses to consumers

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So, moving forward, I'll take you a little bit through what we're seeing with customers. So, the consumer today, as many of us know, as we are all consumers ourselves, we're really seeing some dramatic changes in how businesses continue to do business, yet how consumers prefer to do business.

So, if I take you to the left-hand side, you'll see today that 91% of consumers want to engage using text. Regardless of what it is, they want to be able to text whenever they want to buy something or learn something. Ninety percent of consumers out there today trust online reviews as much as they trust a personal recommendation. And I tell you, I'm no different, whenever I go to buy something, whether it's a new car, whether it's something I want to purchase for the house, the first thing I'm going to do is go to somebody's website. I'm going to look at what kind of reviews they've had and understand if that's something I want to pursue.

It's not any different with insurance. People still want to understand if this is an agency or a company that others have recommended. Sixty percent of consumers believe that future shopping is going to incorporate both the human and digital aspect, which I think sets up awesome for independent agents because you guys are that trusted advisor, you are that human contact they want. They just want to do a lot of work digitally, and then when they have questions or concerns, they want to be able to talk to someone that can help them through the process.

And then lastly, 60% of consumers' transactions last year were online, compared to just 42% one year earlier. So, you can see this number just jumping almost exponentially right now. We just can't not understand that consumers are going to do business online, regardless of what it is they're purchasing.

So again, as I talked about businesses and consumers, most businesses are still trying to do business face-to-face, with mail, with phone calls, with email, and customers are pretty predominantly saying that, hey, we don't need to talk to people all the time, we really prefer the text, we prefer social SMSs, and we like videos and video chats. So just a reminder that as we evolve and you think about how consumers want to do business, this is going to be important for all of us to consider how our businesses look today.

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Slide, Future Readiness Learnings, two screenshots from the Travelers website

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So, moving forward, I wanted to talk a little bit about helping agents get future ready. Not only agents, but carriers. We've spent a lot of time thinking about how we need to be future-ready, as a lot of our competitors have as well. And one of the things we did was we came up with a future-ready assessment. And thanks to all of our agents that have taken that, we've really received some incredibly valuable input.

And quite frankly, we really listen to our agents to help us shape the investments we're going to make moving forward because what you need to be successful is only going to help us be successful. So, partnering together to make sure we're future-ready is really, really important. It's a great survey, if you don't have it, we'd be happy to share it with you. I think it's a great check within the agency, not only at the top, but throughout all the employees within an agency to understand how everyone evaluates your future-readiness.

What I really like about it is we can score your success in becoming future-ready and whether you're an agency just starting in the business and you don't know how to get future-ready, we've got some great tips, or if you're a very sophisticated agency at the other end, we think we can bring home a couple more ideas that only continue to help you be more and more future-ready and meet the expectations of the customer.

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Slide, Future Readiness Learnings, statistics and four images of tools and programs

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So, moving forward, I want to talk a little bit about some of our learnings that you have shared with us. That really, again, are helping us think about how we're going to invest in your future-readiness. If I take you from left to right, we found it really interesting that 36% of agents don't use any carrier digital marketing tools.

Not necessarily a publication for Travelers, but I think many of your carriers, we just happen to think ours is the best in the business in ToolkitPlus, you should leverage anything you can. Fortunately, our ToolkitPlus program's really been well-received by our agents, it's driven better results within quoting and actually getting an issuance. So, we're really excited about what ToolkitPlus brings to our agents, not only from the standpoint of now having mobile capabilities but being able to share metrics with you and even tighter security that I know is on everybody's mind today.

Another thing we learned from the survey is 36% of agents haven't claimed their Google listing and don't show up in a top-five search. Now, I just talked about how when most people go to buy something the first thing they're going to do is try to get to you through your Google listing. And then they want to know what others are thinking about you. So really, really important to claim this Google listing.

This was a capability we didn't have at Travelers, and instead of actually building it, we said we need to find a partner. And we found a great partner in Podium that provides not only how you can grab your reviews, but how to claim your Google listing. And how to make sure you have texting capabilities, going back to what the consumer is looking for, that texting capability back and forth with you.

Next, we found it interesting that nearly 40% of agents don't provide immediate business quotes. This would absolutely be a disaster long-term if we can't provide immediate quotes because a consumer can go online and immediately get a quote. So, we have to make sure that you have capabilities to compete against those direct-to-consumer companies, those online companies, by providing that immediate quote.

So, we developed a Digital Quote Proposal where literally everyone in your office can text to the consumer right then and there after you've talked to them, text them a quote. What we find with this in addition to not only being able to provide that immediate quote, we also see that they begin asking questions about other lines of business they may want to insure with you. We actually see them take up more coverage when they begin to do some of the educational pieces within the Digital Quote Proposal. So that's really been a hit and something I highly recommend all agents make sure they have the capabilities to do.

And then lastly, 40% of agents, nearly 40%, don't offer any extended or after-hours service. And I think everyone realizes that we're living in a 24 by 7 world and having the capabilities to work with that consumer whenever they want to, is really going to drive their loyalty to you. So, we've invested in our customer care center. I know some agencies have invested in their own customer support systems, but we're really excited about ours because not only does it provide that service during the day when you may need additional help, it provides the after-hours services as well to make sure your customer can get to you any time. And we do all the servicing for you. So just one last thing that really came up that we really found we needed to continue to invest in.

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Slide, Investing in the Future, a list of logos and infographics

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So, as we think about the future, just wanted to put up a lot of different things I think both carriers and agencies alike should be thinking about. The first one is the self-service. We just happen to show a picture of our mobile app, but self-service is key. Every consumer out there, and I'm one of them. I have a great independent agent, but there are things I can do that I don't need to bother my agent on. I need my agent for those important questions to help me better understand insurance needs, versus just making a bill payment or changing a mortgagee.

Virtual inspections, we know we have to continue to invest in that. Consumers, again, like that capability, want it, and we can actually pay their claim much quicker when we have them send in virtual pictures and inspections. We've continued to invest in technology to ensure agents are successful, whether it's from a servicing standpoint with agency dashboard alerts, whether it's through APIs or other connections, to help you with real-time quoting of the business. We continue to make those investments because we've heard loud and clear.

Bill's talked to you about telematics. Again, we're really excited about our results there and that comes from all the efforts. I think, as Bill said, we know all you have to do is ask because 50% of the consumers out there today are more than willing to take on any type of telematics measurements. And we continue to invest in education for our agents, whether it's through learning about the industry, whether it's about having specialty speakers, we want to make sure that you have all the information you need.

And then lastly, I'd hit on in the far left-hand corner at the bottom, is a premium compare tool. We know that this is going to be a tough year in 2022 and probably going into 2023 as well. And the more we can help you educate consumers, explain why premiums are going up, to Bill's comment earlier, we want to help you resell why they chose your agency, and why you chose Travelers to be the company. We know that that's probably one of the most important things that you're having to do right now is explain those premium increases. And we want to make sure you have the tools to do that so that you can retain the business and continue to grow as premiums go up in the environment we're in.

So, with that, I'll pause and turn it back to you, Joan.

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Joan reappears on the call. The slideshow disappears.

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JOAN WOODWARD: OK. Terrific, Loree. That was just great. The overview just-- you touched on so many different things, both Bill and Loree. So, but I want to talk about something about the customer. I've heard you both say we need to serve customers how they want to be served. And we all talk about Amazon and our last experience with Amazon. So, what does it actually mean for Travelers? What are we talking about in the insurance industry having the customers tell us how they want to be served and how can agents keep a pulse on that?

BILL ZIELINSKI: Great. Well, let me take the first part of that. We think it starts absolutely with asking the customer. We have market research capabilities, we have partners with that, we have study groups. So, it's about starting with asking and then really listening to the responses. And to us, this means engaging with customers when you get started with an idea, as you're testing concepts, as you're understanding usability of what you're developing. And of course, once you get it into market, really having an ability to understand the customer experience, the Net Promoter Score and have that feedback in your solution.

So, this idea extends into where we offer our products from the distribution standpoint, how our products are designed, and of course, how we support our customers in terms of interaction with our products over time. So tangibly, it manifests in examples like telematics, which I had shared. It manifests in how we provide an ability to engage with us from a service perspective, mobile apps, mobile websites, voice chats. We're providing options for customers. And of course, also allowing customers to self-service, like the self-inspections that we had talked about, when they want to. But with that, let me hand it over to Loree to talk about how agents can really keep a pulse.

LOREE TOEDMAN: Yeah. I think, Bill, there's going to be a lot of overlap between consumers and agencies. And I think we all have to put the customer at the center of everything we do. It really starts with what the customer wants-- the consumer.

And it's what we just talked about; we have to be available to service them 24 by 7. We have to bring them the digital capabilities they're looking for. Whether it's digital self-service, whether it's texting, we know consumers want that, whether it's-- you have a dynamic website that they can interact with you on any time they want. And quite frankly, just leveraging your trusted advisor status. Now, I think that's a huge advantage for the independent agency channel is all these digital capabilities still bring the customer to you when they have those difficult questions. So, Joan, I think we're looking at it pretty similar between the consumer and the agency side.

JOAN WOODWARD: So, Bill, just a quick follow-up on that, and I've never done it, but are people actually taking pictures of say a tree fell on their roof or on their fence? Do you see a marked uptick in people submitting their own photographs to file a claim?

BILL ZIELINSKI: Yeah. We really have. It's a great capability for customers, and especially as we moved into the pandemic, we did see increased adoption. Now, fortunately, I think our organization had the foresight to understand that that was a really important capability from a customer standpoint, and then as the pandemic hit, it really accentuated the interest. And I'd say similarly on the self-inspection side when you're purchasing a policy for us, we continue to see improvement in adoption from a consumer standpoint. And there is a willingness there and we're continuing to figure out how to dial into that.

JOAN WOODWARD: Yeah. And I think the app from the App Store rating, I know ratings can vary and lots of different factors, but your rating, you mentioned it on the App Store was what for the Travelers app?

BILL ZIELINSKI: For the IntelliDrive app it's 4.5. And I think for our self-service app it's even higher.

LOREE TOEDMAN: Yeah. 4.7, Bill.

BILL ZIELINSKI: Thank you. Yep.

JOAN WOODWARD: That's really remarkable, actually, because a lot of people are very unhappy with their insurance company. So, anything above four I would think is terrific. So, congrats on that. OK, I want to get back to Loree. You talked a lot about growing market share for our independent channel, independent insurance agent's channel. So, you attribute a lot of that to growth in homeowners. What about auto? And how are we ensuring or helping agents get that auto book as well as homeowners?

LOREE TOEDMAN: Yeah. No, you're right on, Joan. We've certainly seen, quite honestly, homeowners rates increase so much like Bill talked about that they're now about the same as automobile premiums. So, I think naturally, agents have kind of moved towards leading with the homeowners’ quotes. And I do believe in parts of the country there's a lot fewer carriers in the homeowners’ marketplace, which makes them kind of lead with the home and then try to get the auto.

But we've really worked hard on helping agencies see the benefit of total account solutions, as Bill mentioned earlier. If they get that home, go after the auto, go after the additional lines. We put credits in place, so the more policies you write with us, the more credits you get. We know it insulates us from a retention standpoint. As I showed that market share, as the captives-- no, or excuse me, as the direct market—direct-to-consumer marketplace picks up auto, we have to make sure we're insulating ourselves. So, if we grab that home, we've got to bring that auto in.

And quite honestly, we think we put technology in place that really makes that much easier than it's ever been. We really like how our systems are integrated so that you write the home, or you start with the auto and you get the home, and then you insulate yourselves with each additional line of business.

So, probably the best way to get the auto is to quote with all discounts. Bill talked a lot about IntelliDrive. That's really kind of our ace in the hole for the independent agency channel to be able to compete and have a competitive price. And then you bring it in and get all those discounts. We really think that that's kind of the secret to success right now.

JOAN WOODWARD: Great. Well, you talked about the telematics, let's dig a little deeper. We have to acknowledge that April is Distracted Driving Awareness Month, and as many of you know on the line here, we launched a program called Every Second Matters really to raise awareness, at the Travelers Institute about the dangers of distracted driving. And Bill, I know you worked hard on kind of the risk index that we put out every single year. It's the number one top issue on people's minds.

In 2021, the statistics were very sad for us, we had 42,000 souls lost on our roads and that's when miles driven was actually down in a pandemic year. So, tell us what you're seeing in your data with telematics, and what other interventions can you talk about? Adding distraction to the app that you did a few years back, what are you seeing in the data, and how can we just turn this around and save more lives?

BILL ZIELINSKI: Yeah. It's a really important issue, right? And not just a business issue. And to your point that this index, the 2021 Travelers Risk index survey had some, I think some startling data points. In addition to what you had called out, post-pandemic we are seeing drivers being much more distracted than they were in the past. Twenty-six percent of folks on the road admit to texting or emailing while being on the road. Twenty percent checking social media, and 17% shopping online while on the road. So pretty shocking numbers.

And so, not surprisingly, we felt very compelled to add that fifth variable of distraction to our new IntelliDrive program. And if you step back and you look at the industry, you see that same tack being taken by a lot of competitors. So, it is an issue. I would say without going through the details, we have data on it, and it tells us it's an issue.

There recently was a distracted driving report published by really one of the major providers of telematics solutions, Cambridge Mobile Telematics, and they found that February of 2022 was the worst month for phone distraction since 2019. It was up almost 30% relative to year over year. So, I think it's pretty clear that this is an issue that needs to be addressed.

What do we do about it? We obviously-- we like the adoption of IntelliDrive. We think it provides us a really good surface area with customers to influence. We provide a score, which I-- for me is motivating, I want to score better. That's one aspect.

We also attempt to influence behavior with things like gamification. So, think about it as a distraction-free streak. Of course, there's educational materials, there's driving tips, and a lot of that is targeted around distraction. But obviously, to your point, the programmatic work around Every Second Matters is really valuable beyond Travelers’ customers and really for society at large.

We absolutely think education awareness is part of the solution. I'd say part of the solution is financial incentives. When you look at the telematics programs that insurance carriers offer, there are discounts for better driving behavior, inclusive of distraction. There also are-- outside of insurance, there are penalties for tickets. In Connecticut, I can't drive up 84 without seeing a sign that says You Drive, You Text, You Pay. And I think that's really important.

Lastly, I would say there's an onus on companies that are designing technology in cars and in devices to really think about how do they provide capability, but at the same time, don't accidentally promote or increase distraction while driving. So, I'll end with distracting driving, you really-- it can't be a culturally accepted behavior, we have to say something, we have to take control, we have to silence our phone, put on “do not disturb.” So, like many things, I'd say there's not one answer, but I think there's many levers. And it's pretty clear evidence out there that says it's an issue that needs to be addressed.

JOAN WOODWARD: Yeah. And I think what I love about our program is we really talk about modeling the behavior. And so, for any of you listening in today, if you have employees and employees are out there on the road driving and you know they're driving, don't call them, don't call them when you know they're driving. And if you're the employee, you see your boss calling, don't answer. And then have that conversation with your teams in your offices, just say look, I'm not going to call you while you're driving, and you should not answer while you're driving. If there's some emergency, obviously, pull over, you have the “do not disturb” app on all of our cellphones now, please activate that. And we have lots of instructions on our website, travelersinstitute.org, to help you talk to your employees and others about that.

OK, Loree, back to you. So, we have a question coming in from the audience here, and I really like this question because he says, I'm a younger person in an agency that's been established and around for 50 years, run by a terrific family. I am the young person trying to change and digitize our offices. And I'm wondering about your future-ready, you always talk about making agencies future-ready. So, if you had one recommendation or some advice for this young person trying to kind of help the agency move into the next digital phase of their own evolution, what would be that one thing or two things, Loree, that you can help this younger person talk about being future-ready in his agency?

LOREE TOEDMAN: OK, since you gave me a little leeway there with maybe more than one suggestion, I'm going to take advantage of that. I mean, I think the first thing really starts with doing an assessment of where you stand today. It's hard to-- if you don't have a baseline of where you are today it's hard to know where you need to get. So, I think understanding what capabilities exist today.

And then if I had to truly pick one thing that I'd invest in, I think about what's going on in the industry, the direct-to-consumer carriers are out there, 1-800 or website capabilities. And when consumers go there, they get that quick quote right back, it's usually texted to them. So, I love what we're doing and I'm sure other carriers are going to invest in it as well, but digital quote proposals that can be texted. I just showed you the data, consumers want to be communicated through text, and they want everything instantaneous.

So, I would say, after you do the assessment and you figure out where you stand, I'd start investing in texting capabilities in the agency. Realizing a lot of agency owners don't want folks to use their personal phones and people don't want to use their personal phones, there's vendors out there like Podium that have those texting capabilities that will work throughout the agency. And that way you can start that quick texting of a digital quote proposal. You're meeting what the consumer needs, and you're doing it the way they want to do it. So that's probably where I'd start.

JOAN WOODWARD: OK, terrific. Thank you, Loree. All right, I want to switch gears a little bit and talk about one of the number one issue on everyone's mind, which is attracting and retaining talent. So, we've heard about this great resignation during the pandemic, and people are reevaluating their lives. So, both to you, Bill first: how do you talk about to a new graduate about coming to the insurance industry and talking about all the different facets of insurance? And getting those people in and then keeping them, keeping them engaged. How do you do it in your business, Bill?

BILL ZIELINSKI: Yeah. That's a great question and talent is so top of mind these days. I'll start like personally in my career I was a consultant at the beginning. So, I had a chance to actually experience a couple of different industries-- high tech, natural resources, medical technology, financial services, and I intentionally went into insurance about 20 years ago. And honestly, I'm still hooked. It still has a new car smell to me.

When I think about why is it still exciting to me, the first thing I think about is the human element. It's just so foundational to the industry. The relationships that Loree and her team and everyone has from an agent, a broker standpoint, customers, working with cross-functional teams. When you're able to see how an insurance company, your company, is there for individuals and families at their most critical time of need, you understand why we do what we do.

And second, I'm enamored and constantly challenged by the complexity of the marketplace quite honestly, regulatory, compliance, evolving business models, it's exciting. You can see it with a lot of the money that's flowing into the insurance industry.

And then finally, I love technology. I love data. There's vast reservoirs of that. And so, you're constantly challenged with how do you harness the power of that data to deliver a better experience and better product to our customers? So, I get really excited about it. To me, there's meaning in my work, there's always a challenge. It can stretch you in many different ways, people, strategy, technology, data. I've just never gotten bored, and I really don't expect that I ever will. So, for those of you, if that sounds interesting, come join us in the insurance industry.

JOAN WOODWARD: All right, Loree, same question to you. What are you doing? What are you telling agents? Because agencies are all facing this issue as well and they're all competing for this talent. So, what are we doing in Travelers to help agencies with talent management?

LOREE TOEDMAN: Yeah. No, that's probably the number one question I get, to Bill's point and to your question today, is how can we learn from you, what's working for you? Maybe I'll just hit on three really quick things. I'd say flexibility, diversity and inclusion, and recognition of work. So, from a flexibility standpoint, I think a lot of us learned how differently we can operate in a post-COVID environment. And most folks have moved to hybrid environments. We've done very similarly where we require so many days in the office and then so many days of work from home, and I think talent is looking for that flexibility. So that's one thing that we've spent a lot of time on.

On the diversity and inclusion end, I grew up on the agency side, so I was in an agency in Topeka, Kansas with my dad. And one of the first things he encouraged me to do was to become a member of the Big I, and I spent a lot of time with the Invest program. And I think recognizing all those different opportunities out there for people to learn about the insurance industry is really, really important. To Bill's point, I don't think most people grow up wanting to get into the insurance industry, but we have everything to offer that any corporation does, from finance, to sales, to product development, to human resources. You can go across the gamut. And the industry offers all of that.

Now, I'm a big proponent of diversity networks and that's something Travelers spends a lot of time thinking about. It's just an imperative for us from a business standpoint. And one of the things we developed at Travelers as you well know, Joan, is the SHE Travels program. I’m part of the Women's Diversity Network, and part of the folks that help lead the She Travels, where we've really helped women not only invest in themselves, but in their business, by talking to other women, having mentors, being able to have conversations about challenges in their business.

We've got a really cool LinkedIn program where you can join and communicate back and forth that way. So, again, regardless of what type of network it is, I think it's really important to find individuals across any industry that you can give them more and more information about the insurance business.

And then I'll just-- I'll end with recognition. I think employees today want to be recognized for their work. I lead a sales organization, so for me, that's a daily thing. When we have a great week of sales, we're talking about it. We're slapping each other on the back, we're high fiving. We have a lot of fun with recognition. So, I think that's what folks are looking for. It's a tough environment out there, regardless, with everything we've been through with COVID, regardless of the industry. And I just think recognition is really, really key right now.

JOAN WOODWARD: Great. I couldn't agree with that more, Loree. So, all right, we're going to take your questions now, so please drop them in the Q&A if you have any. So first one comes from Laurie Hance, Hance Insurance. Probably to you, Bill. How does the future look with more auto manufacturers covering their car insurance themselves, usually combining them with leases? How are we thinking about that?

BILL ZIELINSKI: Yeah. I think that's a great question, and I think you see many examples across industries where companies are really looking to build on their core revenue stream and move into, to what you call adjacencies. So, I think to some extent, it's a pretty natural extension for some of the car manufacturers like GM, like Tesla, like Ford, to move into insurance. If you remember, GM had GMAC, which was divested years ago.

But what I think is different today is that cars are basically computers, getting back to that 1 out of every 3 cars supports telematics. And those computers are capturing a lot of information obviously as valuable to developing an insurance product. And so, I think that's what we know the manufacturers are looking at, how can that power a new offering, a new adjacency.

What we're seeing is they're developing those offerings. They're also providing that information to other carriers provided, of course, there's a customer agreement. So, these are not really exclusive offerings, and quite honestly, I don't ever expect them to become sort of exclusive environments. Just because, when you think about the nature of insurance, you're never going to really be able to have the placement levels that you need to have sort-of exclusivity as a manufacturer.

So, when you think about it, writing one policy for one driver on a purchased vehicle is relatively easy in the grand scheme. But what it's really about is providing protection for a household of drivers, vehicles, and that gets a little more attenuated, a little harder from that purchase. Plus, we know there's real value to providing protection for a customer holistically, property, umbrella, personal items, boat, yacht, et cetera. And that would take manufacturers a bit farther.

So, we're not surprised to see these examples of manufacturers looking at insurance offerings. We'll always, like everything, seek to understand those models. If there is a mutually beneficial opportunity, of course, we'll look at it, we’re a business. But our focus is really on our active car strategy from an auto standpoint and ensuring that we have the right products to support our customers overall.

JOAN WOODWARD: And this is a tough business right, Bill? You have to have decades of experience in underwriting and the claim, just having the whole claim operation stood up to service these policies. That doesn't happen overnight I assume, right?

BILL ZIELINSKI: Absolutely. No, I think that's an excellent point. And we've seen some of that when you look at some of the InsurTechs coming in. It is maybe a harder business to run than it looks like from the outside. And your point around underwriting and pricing experience is really paramount. And of course, that service from a claim standpoint, it's not something you can initiate very easily.

JOAN WOODWARD: Actually, you went to it, so let's go with another audience question on InsurTechs. And this person asks, what is the future of InsurTechs, all the hype, the IPOs, the run-up in the stock, and then the run down in the stock, and they're finding it harder to run this business than maybe some of the private equity folks who invested in them thought. So, what are your thoughts on InsurTechs? Bill, why don't you start, and if Loree, you have anything to add, that'd be great.

BILL ZIELINSKI: Sure. Yeah. And I touched on it a little bit. We take everything serious from a competitor standpoint. We think there's always something to learn. And when InsurTechs came out, what we were really interested in is how they employ technology, how they delivered experiences that were intriguing to customers because there's traction, right? If you look at a couple of those InsurTechs, they have relatively significant volumes of customers and premium. And so, we really try to focus on that.

What we were very interested in was over time how were they able to match risk with price? And, I would say a couple of examples we saw a finite set of questions and we wondered over time would that change, and we absolutely saw that. We saw the question sets expanding as they were trying to better match that price with risk, starting to ask questions about roofs where they didn't on property. We think that's pretty fundamental.

And so, I think they're going through a lot of growing pains. Again, we'll continue to look for inspiration and look for examples of things that we can do better from an InsurTech standpoint, but we feel really confident about the business model that we have, the products we're developing, the distribution network that we have. And we can compete with sort of the quote-unquote traditional carriers, as well as our InsurTech competitors as well.

JOAN WOODWARD: OK.

LOREE TOEDMAN: Yeah. The only thing I'd add, Joan, is I think InsurTechs have challenged all of us to be much simpler in how we do business and make it easier. And I think they learned along the way that expertise is king, and quite frankly, we've partnered with some InsurTechs to make sure that we help them not only from an expertise standpoint, but from a distribution standpoint like we talked about earlier. So, it's actually I think it's been a good challenge on both ends.

JOAN WOODWARD: Great. OK, Loree, this question is probably for you, from Kristen LaPlante. She asks, will self-inspections and/or self-endorsements be accessible to the independent agent to be sure any self-service was done correctly? I like to stay informed and involved with our insurance policies, which is a perk of having an independent agent. This is a good question, Bill right-- and Loree? As our technology evolves, we're taking our own pictures, how do you know that I took the picture correctly, right? And how does the interface with the agent happen when we're doing more self-service activities for customers?

LOREE TOEDMAN: Yeah. Maybe I'll start, Bill, and you can bring us home on this one. So, one of the things we just put out into the marketplace is called For Agents dashboard. And it really does give our agents more real-time notification of business they're servicing. So, think about any types of requests they may have sent into our underwriters, our PI service. We can let-- instead of them having to pick up the phone and call, we can now show them where we are on the request. Maybe it's reports on something they're wanting to find out. And frankly, a lot of it's just alerts us to what's going on in their book of business.

So, I think that's one of the things we're working harder and harder to make sure that we have those capabilities. We continue to build those in from a claim standpoint as well. So that we can alert them with different types of claim notifications as well. Bill, I don't if you have something you'd add to that?

BILL ZIELINSKI: I think you covered it great. We believe in transparency and the service of our mutual customers. And I think a lot of longstanding insurance carriers will say, we had to get the infrastructure, we had to get the data in place so that what we see and how we interact with our customers can be available to our agent partners. And that's absolutely an investment we've been making, to Loree's point, and that foundation that we've been building over time.

JOAN WOODWARD: OK. Another timely question here, it's kind of two-part. I understand inflation and the conflict in Ukraine is driving supply chains and prices higher and higher and higher, but customers just want lower prices. Are we seeing any increase in customers being more interested in what is influencing the cost of their personal insurance products? I mean, is it hard to explain why rates are going up in these different states? Or how would you help an agent explain it I guess is the question.

LOREE TOEDMAN: All right. Maybe I'll start, Bill, and let you follow up again. So, we're taking that really seriously right now. We're an organization that's trying to grow our top line and continue to do it very profitably. So, we've spent probably the last six months of the year anticipating what's going on in the marketplace. Everything Bill talked about earlier. And we're really working on the education side, making sure that our agents have the information they need to explain what's going on and why that is causing rate increases. So that's been a huge part of it.

We continue to educate around how you can make the price more competitive. So, whether that's like we've talked about IntelliDrive, that makes us very competitive in the marketplace. Whether it's writing more pieces of business to get those multi-policy discounts.

We've got a new, actually, tool that we just took out to our agents about 30 days ago that I mentioned, one of the investments we're making for the future is premium compare tools. So that people understand why their premium went up. I can't tell you how many times they just assume it's all rate, when if you step back and look at changes they may have made to the policy, whether it's taking off one car and adding another, whether they had a new driver in the household, customers forget those kinds of things. And I think having that availability right then and there for the agent to explain why the rate did go up, again, in conjunction with what we're seeing in the environment, we're really trying to spend a lot of time on reselling them on why they are with that agency and with Travelers. So, Bill, I'll let you add on to that.

BILL ZIELINSKI: Boy, you covered it great. And probably the only thing I'd add is that was specifically something we thought about with our recent product development Quantum Home 2.0. We wanted to build in flexibility for customers to select the right coverage for them as opposed to in the past, it might have been a little bit more sort of structured and contained. And so, we give customers those options. To Loree's point, we continue to focus on finding the opportunity to provide discounts. And to the point around be it telematics, take-up rate or digital auto discount, we are seeing customers increasingly adopt that. And I believe partly that is to try to take control of the price point.

JOAN WOODWARD: Terrific. Well listen, this hour just flew by, and I want to thank you so very much to both of you for your time, your expertise, for sharing it with all of our viewers. And I'd like to invite you back, of course, to talk about the evolving marketplace as we see it and hopefully getting inflation under control and getting more employees in our industry, attracting that diverse talent that we so desperately need and want in our industry.

So, thank you for doing all you're doing for our agents and our employees. And let's keep working on distracted driving because I know we can make a big dent in that and help people to work on it. So, also speaking of-- so thank you Bill and Loree for being here today.

And I also want to thank someone very, very special on the Travelers Institute team, my longtime colleague and friend,

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Slide, a picture of Joan with a woman and a picture of a cupcake with the woman's face airbrushed on the front

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and there she is with me yesterday, and with her little face on some cupcakes. We held a little going away party for Katie Reilly. She's been at the Institute for eight years. She helped us shape the Institute over the last eight, she's helped-- dedicated a lot of her precious time. She's a mother of three, she's a marathon runner, just got her master's degree in public policy. And we're just so grateful to have her on this team.

I am just personally thankful for you, Katie, to making me a better person running the Institute and for all you've done-- mostly behind the scenes, folks. A lot of people give us credit, but it's people like Katie who makes this all happen. So, it's your last day today, stepping back to be with the family, and we're just so proud of you. So, join me in thanking Katie. You'll be sorely missed. And we wish you all the best, my friend.

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Now, let's talk about the upcoming programs. On April 13, we want to level up your LinkedIn presence. This is a impactful, powerful way, just in one hour, you're going to figure out how to change your LinkedIn profile so it really is a selling profile in your business. And then April 20, we'll talk about fighting insurance crime. We have some experts there. And then May 4, I'm hosting the former U.S. Surgeon General Jerome Adams on lessons learned from the front lines of the pandemic. He was the surgeon general when the pandemic hit the world. And so, we'll hear from him. You can register for any of these programs at travelersinstitute.org. I invite you to connect with me directly, there's my LinkedIn.

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And if you haven't already, please take a minute to fill out our survey. We're very interested to hear your thoughts and who else you might want to see on our programs, and what other topics you want us to tackle. So, again, thank you to our speakers today. Farewell, Katie, we're going to miss you. And thanks to you all for joining our Wednesday sessions.

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