Travelers Reports 17% Profit Hike in 1Q

April 23, 2014

  • April 23, 2014 at 8:40 am
    lonestar says:
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    “Our very deep agent, broker and customer relationships, highly segmented pricing strategies and expense discipline continued to deliver strong and improving underwriting results,” Chief Executive Jay Fishman said in a statement.

    That’s funny. The only thing “deep” about Travelers agent relationship is how deep Travelers is sticking it to the agents this year, particularly on the personal auto called “Screw’em agents 2.0.”

    • April 23, 2014 at 2:11 pm
      Agent says:
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      Hey lonestar, you forgot the lower commission on stand alone HO. Can’t bundle because they rarely come out. Oh, let’s not forget their monthly commission statements that they pay out piece meal if a customer is on direct bill or even EFT.

  • April 23, 2014 at 9:27 am
    GAAP Gary says:
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    It seems odd that lonestar noticed the ‘deep relationship’ comment but missed the 2Q title for the article about Q1 profits. Thus, he might have missed that every company is tightening their belts regarding expenses, including agents commission allowances. With improved technology and great mechanization of rating for personal lines, agents do less and less. Thus, they deserve less compensation for their reduced work. Perhaps Travelers has less deep relationships with less profitable agents who are more costly than other agents, and who deliver less desirable portfolios?

    I will not judge the Travelers relationships with their agents. I am only pointing out that personal lines carriers are identifying excessive expenses due to intense competition in that industry segment.

    The phrase ‘highly segmented pricing strategies’ implies agents have better tools to compete for market share, which helps spread their overhead costs over a greater base.

    Lonestar may have legit complaints about the Travelers, but didn’t share them in detail. So we can’t judge their merit.

    Are Travelers actuaries predicting their 2Q financials in April?

    • April 23, 2014 at 2:02 pm
      martin says:
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      In Lonestar defense. Back in the day I use to write over 200 auto and home applications a month. There is so much competition now, the companies need to up commissions because we have to use resources to gain that customer. We use to just pick the phone up and write a policy…. No more. I have carriers that pay me 20% commission for my good customers. The 200 customers a month were not so good. In this day and age you must battle for the good customer, I expect to be paid handsomely for them. These customers are not Geico material.

      • April 23, 2014 at 2:15 pm
        Agent says:
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        Wow Martin. 200 apps per month? You must have a big volume of PL on the books. Travelers was my number 1 PL market for several years and now they struggle with being #3 since they took so much rate and their Auto was a joke. Now, the 2.0 is a little better cost wise, but we get our commissions cut for selling it. If I have a comparable rate from my other carriers, they get the business because we get a fair commission for writing with them.

        • April 23, 2014 at 2:33 pm
          martin says:
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          The 200 a month was in 1998- 2004. It was easier back then before all the direct writers came into play. My top players then were GMAC and Allied. Those days are gone. I write the middle upper class today. Their harder to find , but the retention ratio is high and they have fewer claims. A customer less than this is a Geico/ Progressive direct customer. Good luck!

      • April 23, 2014 at 5:21 pm
        KK says:
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        There is so much competition now, the companies need to up commissions because we have to use resources to gain that customer…….. I have carriers that pay me 20% commission for my good customers.

        What carriers are writing at 20% commission? I would like to see what their combined ratio is.

    • April 23, 2014 at 4:32 pm
      Libby says:
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      GAAP –

      “With improved technology and great mechanization of rating for personal lines, agents do less and less. Thus, they deserve less compensation for their reduced work.”

      Do you have any idea of how much work goes into securing an account? Travelers is not the only carrier that we have to quote. We do a tremendous amount of work to write one small policy. How much more work is Travelers doing that they can unilaterally decide they deserve those commission points more than the agent? Without us – YOU HAVE NO BUSINESS.

      • April 23, 2014 at 5:24 pm
        KK says:
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        Without us you have no business – without carriers you have no insurance to write. It cuts both ways.

        • April 24, 2014 at 9:18 am
          Libby says:
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          We have alot of choices where we place business. You are not the only game in town. Show some respect for who your true client is – the AGENT.

    • April 23, 2014 at 4:47 pm
      John Q. Agent says:
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      GAAP Gary – In response to your rather “lame” statement: “With improved technology and great mechanization of rating for personal lines, agents do less and less. Thus, they deserve less compensation for their reduced work.” …. You gotta be kidding! My P Lines staff is working very hard to retain our clients – Agents have been out-spent 10 times over by direct writers like Berkshire Hathaway and Progressive. Annually, two thirds of our client base gets re-marketed by our staff as people are telling us they’re hurting financially, they are having to “shop” for everything, and there is a finite supply of clients who are gainfully employed in a state of declining population (MA). P Lines is not a growth industry ! Folks are doing without…. I would opine that the efficiencies you claim are advantages to agents are merely talking points of the Company suits, (or pin heads like you) who have no clue what it’s like to run an agency. For over thirty years agents have begged for real time single entry from the insurance industry so we can really operate efficiently. Instead, we’ve had to spend even more money for a third party (mediocre and often inaccurate) rating work-around. The expense of agent’s technology required in the offices can easily run $50,000 a year in a medium sized agency if we don’t cut corners. Lastly, the insurance industry has simply pushed all the processing back onto the agents’ already overburdened personnel. What efficiency ! So Mr. GAAP, I think you and your cohorts who think the agency business is the gravy train need a reality check and further assessment of the facts. If Travelers & other companies continue to cheat agents out of a fair compensation arrangement the market forces will react over time.

      • April 23, 2014 at 9:58 pm
        GAAP Gary says:
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        Personal lines requires less production effort than other lines. How are BH and Prog able to steal clients from you?

        You are correct that market forces will act to balance supply and demand via price adjustments.

        • April 24, 2014 at 4:29 pm
          lonestar says:
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          GAAP Gary, I think what martin was referring to is that many of the substandard, non preferred customers(low limits, some activity, low information consumers) go to the Lizard folks or Progressive. I quote Progressive all day long, and their appetite is not one for preferred clients.

  • April 23, 2014 at 2:39 pm
    Big D says:
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    Hey GAAP Gary, who are you kidding! My rent goes up, my staff wants salary increases, my rating software goes up, and let alone my health insurance and you want us to sit and take Fishman’s garbage. Oops I’m sorry you work for Travelers did you say?
    Come on get a life!
    Remember, Fishman said “we realize agents have choices.” If you keep plowing PL to TIC – you’ll either be moving it or losing it! “Clients have choices too!”

  • April 23, 2014 at 2:53 pm
    martin says:
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    I find it amusing when the carriers say “we pay agents 15% for their work.” I remind the carriers as often as I can that we pay them 85%. My clients could care less who their insurer is. What the client do care about is my agency that places them there. Clients go where we advise them to go. Some day the huge disconnect between agencies and carrier will come to an end. A good end I hope.

  • April 23, 2014 at 5:34 pm
    lonestar says:
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    Martin, you are 100% correct. As agents, WE PAY THEM 85%. The carriers seem to forget who are feeding them.

  • April 23, 2014 at 5:35 pm
    KK says:
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    I visit many agencies and they usually have positive things to say about Travelers and they especially like keeping business with them for profit-share reasons. I do not work for Travelers. In your commission discussions you also need to include your profit sharing commissions don’t you?

    • April 24, 2014 at 9:24 am
      Libby says:
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      No, you don’t include your profit sharing. It’s not a given that you will even get any profit sharing or at what amount. Profit sharing is just that, a bonus for writing profitable business. It is not the revenue paid for securing and placing an account. You are a typical company person. Stay there. You’d never make it on the agency side.

  • April 23, 2014 at 5:39 pm
    lonestar says:
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    KK, profit sharing is not worth a “Captive” mentality coming from the reps these days, which is basically “Sell our products no matter how competitive we are, no matter what the commission, or off with your head”. Travelers seems to have forgotten that THEY chose to operate with INDEPENDENT AGENTS, not captive agents.

  • April 27, 2014 at 1:01 pm
    agent14 says:
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    Funny. Travelers decisions regarding agents has created a divide between Travelers the company and the agents that represent Travelers.

    • April 28, 2014 at 9:54 am
      Libby says:
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      You have no idea. It’s to the point where I’ll place anywhere else I can just not to give it to Travelers.

  • April 28, 2014 at 2:47 pm
    agent14 says:
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    I wonder if Jay Fishman is listening. Seems the agents have spoken. Did anyone on Jay’s “team” think to ask an agent about how they felt about paying them 20% less than the market rate on auto, before they rolled this out?



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