Travelers Will Continue to Seek Improved Pricing: CEO Fishman

October 19, 2012

  • October 19, 2012 at 2:20 pm
    Travelers Agent says:
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    I don’t know about other Travelers Agents out there, but we are having some retention issues with their pricing strategy on both Personal & Commercial. It has been going on for 3 years now and shows no signs of abating. I received a renewal on one of my Commercial Packages today which is loss free for 4 years and they want a 40% rate increase. It is probably due to fairly high property values and as many of us know in Texas, property is now a dirty word to a lot of carriers. Looks like we will do some serious shopping to keep from losing the account.

    • October 19, 2012 at 3:03 pm
      Price Shopper says:
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      How much of this business you are losing was also business that you wrote on the front end because Travelers price was lower than everyone else?

    • October 19, 2012 at 4:31 pm
      Oklahoma Agent says:
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      We are having the same problem in Oklahoma. Travelers has priced themselves out of the market in personal lines. I would estimate that we are losing or re-marketing about 80% of their homeowners policies. They are using extremely inflated replacement costs in addition to substantial rate increases.

  • October 19, 2012 at 2:37 pm
    Dave says:
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    The market is in great need of getting rate increases across the board. I’m in the casualty side and up until the last year or so have seen rate decreases across the board for over a decade. This in an environemnt of continuing inflation, lower interest rates and investment returns, decreasing of redundant reserves to help buoy current results and new areas for losses (such as fracking). With interest rates now near zero, the lack of old redundant reserves to help improve results and what looks like another dodged bullet in regard to property Cat losses, rate increases are a must. Add to all that the likelihood of increased inflation down the road due to the Fed’s QE III policies and one can see how it has to happen. And those who resist it will find themselves at the wrong end of acceptable Bests ratings.

  • October 19, 2012 at 2:40 pm
    TX Agent Lady says:
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    We have also had to move good business from Travelers that was claim free. Property is not always involved either. I’m moving a profitable contractor this month. They don’t underwrite a risk if you’re not in a specialized department like Technology, Oil & Gas, Country Clubs. It’s all done by young people that have a list of what they can and can’t do and have no idea what a loss ratio is…I could go on for hours here.

    • October 19, 2012 at 3:59 pm
      Agent says:
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      TX Agent Lady, You know where I am coming from here in Texas. I got a reply from the Travelers underwriter about the account in question. She can’t do anything about the renewal because it was system generated. This tells me they are programming a computer to spit out a set increase on all renewals of this type. By all means, let’s not let a human being do a review and use some common sense and modify a renewal and try to help an agent keep the business with them. What a way to run a company.

      • October 19, 2012 at 4:11 pm
        TX Agent Lady says:
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        Agreed. Unfortunately, some in their organization will confirm what you have said. Those people we work with (can’t call them underwriters) aren’t trained to know insurance. All they have is a list and buttons to push. Hartford isn’t any better. We get a different “underwriter” from them every month and none of them knows anything about the limited product they their department is responsible for.

        • October 20, 2012 at 2:56 pm
          tagteam says:
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          Hartford is a joke. Why would anybody put business with Hartford if you do not have to?

      • October 19, 2012 at 4:13 pm
        TX Agent Lady says:
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        Do you have access to Cincinnati Insurance, or Allied Insurance? They are both doing a great job for us. Bituminous is also a nice company to work with.

        • October 20, 2012 at 2:56 pm
          tagteam says:
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          Allied? Are you kidding? They buy, buy, buy, and then they crawl in their hole for two or three years, and then they come back out and start buying business again. Maybe it is different in Texas, but that is how they play the game in the midwest.

      • October 19, 2012 at 4:16 pm
        Dave says:
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        Big companies have problems trying to promote “change in philosophy” issues and in many cases do automatic across the board fixes such as what you guys are indicating to get it done. To which I say, “Live by the sword, die by the sword.” I surely didn’t hear any complaints about pricing when they were most likely under-pricing much of their business due to formulatic rating rather than good underwriting practices. But the reaction now is swift and harsh when those practices swing the other way. Many brokers over the past couple of decades flocked to the best price or “hot market” at the time. And since few if any got burned due to an insolvency of an insurer, why not? Well all those price shoppers dodged a huge bullet when AIG received a $182 billion bailout. The next failure will not get that bailout so I’d suggest caution out there. You want the cheapest price out there which in many cases is not sustainable, or do you want a financially strong insurer able to pay their claims and who do not have to jack their prices due to past indiscretions? When you sell a program to an insured do you say you got a good deal with a financially strong insurer which is sustainable, or do you say I got you the cheapest price I could get which may have to be increased down the road and may not be able to pay their claims? Think Mission Insurance and Kemper and what should have been AIG.

        • October 19, 2012 at 4:24 pm
          TX Agent Lady says:
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          Dave, I’ve worked for agencies that sold “price” but we DO NOT do business that way at our agency. We were anxious for the hard market to get here, but we would like some reasonable consideration for the BETTER, MORE PROFITABLE accounts. Intelligent underwriting could go a long way to keeping our better accounts in place and that would benefit the company as much as it does the agent. There are other companies, few and far between, that will still underwrite an account.

          • October 19, 2012 at 5:09 pm
            Agent says:
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            TX Lady, I agree with you and disagree with Dave. We have historically done better in a harder market because we sell coverage and service and everyone is in the same boat. However, this harder market is different than others since the economy is in the tank. It is really hard to sell double digit rate increases to companies struggling in this economy. All we ask a carrier to do is be reasonable on thier increases to the better accounts. As we tell them, 100% of nothing is still nothing. If the account goes away, what good did their big rate increase do? We have also noticed the lack of good underwriters. They have culled them out and replaced them with computer geeks who have little or no common sense.

          • October 19, 2012 at 6:34 pm
            Dave says:
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            Funny how everybody wishes for a hard market but then say, “But not on this account” or “But I don’t like the way it is happening”. Unfortunately, hard markets do not occur unless pain is inflicted (bad insurance company results or insolvencies) and inflict pain on buyers. But that’s the way it is. I accept the fact that not all buyers or brokers are aware of the accounts which are grossly under-priced. But brokers are in a unique position to see that happening. When you get 4 or 5 quotes and they look like this:
            $125,000
            $120,000
            $117,000
            $115,000
            and
            $84,000

            You should know the $84,000 quote although attractive is not sustainable. Being on the company side I don’t always see these results. Brokers get a chance to see this on every deal they do. Just learn from it.

          • October 25, 2012 at 2:22 pm
            Libby says:
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            “Unfortunately, hard markets do not occur unless pain is inflicted (bad insurance company results or insolvencies) and inflict pain on buyers.”

            Company guy – that’s kind of hard to swallow when carriers are making record profits. Sound like the typical company BS they throw out and expect agents to accept.

            YOU try getting out there and selling these rates when there are plenty of competitors willing to write for much less. You’d be singing a different tune and moving your Travelers business as quick as you can. That’s how we make our living…

  • October 19, 2012 at 5:22 pm
    TX Agent Lady says:
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    Yo’re right, Agent. Some of our non-oil & gas accounts are having a hard time making ends meet and premium increases are a hard pill to swallow. Our area of the state is doing pretty well economically but others aren’t. I’ve used your exact words, “100% of nothing is still nothing” so I had to laugh when I read that.

    • October 19, 2012 at 5:48 pm
      Agent says:
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      Do you use the Towerstone market for your energy accounts? We have done a few and it is ok, but doesn’t offer Direct Bill since it is broker business. Also, they aren’t very good if you have a sizable property schedule. I had to go elsewhere on that since they were about double. They are good at the specialty coverages, GL, Umbrella etc for energy.

  • October 19, 2012 at 6:05 pm
    Agent Lady says:
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    We use Towerstone and CRC for your casualty lines (energy related). We normally use standard markets for the property and auto. CRC has some good markets for heavier trucks, crude haulers, problem auto and trucks with oil equipment.

  • October 20, 2012 at 2:54 pm
    tagteam says:
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    Well, I guess if you’re 20% below the market on new business, then you can probably keep renewing with pricing increases. Can anybody figure Traveler’s out? I used to think they were a good underwriting company.

    • October 22, 2012 at 9:38 am
      Agent says:
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      Here is how out of touch they are. About 3 years ago, they started the rate taking merry go round with Personal Lines hoping the other carriers would just play follow the leader. They were suddenly no longer competitive on quotes. They just couldn’t understand why we weren’t placing new business with them. We had a meeting with their honchos and showed them the disparity on quotes. They scratched their heads and said they would try to do something about it. The something ended up being another rate increase a few months later. The Marketing Rep says they are positioning themselves for growth in 2013 which means they expect the market to catch up with them then.

  • October 23, 2012 at 10:41 am
    Toby Swindle says:
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    I write personal lines through Travelers, and have also been remarketing 80%+ of my renewals lately. I really hate that I have to, but there is absolutely no way I’m going to attempt to convince my clients that a 25% increase on their homeowners policy is OK, when they have no losses. Not when there are 3 more competitive quotes available. Lets quit joking ourselves, if you don’t remarket that huge renewal increase, somebody else will. Your client can go along with the “song and dance” of how the prior rate was unsustainable (to your face) but finding an insurance agent willing to quote them is not a difficult task. In fact, on a daily basis I am bombarded with adverts and solicitations to get quoted. 100% commission on $0 premium is also $0. It sounds to me like a few agents forget who they actually work for. I work for my clients clients, the insurance carriers are my tools. My goal is always to get them the proper amount of coverage, through a highly rated carrier with a good track record, at the best possible cost. What I hear from some commenters makes me think they are “captive” Travelers agents or something, thats the type of company-man talk I grew nauseated with when I started out as a captive. If I’m selling the proper level of coverage, and the policy is offered by 3 different carriers (I only use highly rated carriers), you (and my client) can rest assured that they are getting the best price. Anything less and I would not be doing my job.

    • October 23, 2012 at 2:40 pm
      Agent says:
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      You are right Toby. We are fortunate we represent 5 companies for Personal Lines. They all blow hot and cold depending on what their management does on filings and rates. We are the ones that have to look the customer in the eye and try to explain their renewal to them Company people sit in their ivory tower and expect agents to do all the dirty work and still put new business on the books and retain what they have. The call I hate getting the most is an irate customer that got one of these double digit increases when they haven’t ever filed a claim. There is no amount of explaining you can do to get them to accept it. They say either move them or they will find someone else to handle their business. So far, we have managed to keep the costs in line while keeping good coverage, but it is getting more challenging as we get further down the road.

      • October 25, 2012 at 2:17 pm
        Libby says:
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        At least they call first instead of just moving it. You must have good relationships with your clients.

        • October 25, 2012 at 5:25 pm
          Agent says:
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          We do for the most part have good relationships with clients, but there are a few oddballs who shop first and then we get the cancellation request without an opportunity to re-quote. We are getting more calls from captive customers like State Farm, Allstate and Farmers who are upset with them. We can usually hand them their heads and often improve the coverage for a lower cost. Those captive agents, particularly Allstate are singing the blues and have sought independent agency status since Allstate’s management treats them so bad and reduces their commissions.

  • October 24, 2012 at 1:42 pm
    csrsd says:
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    I am a personal lines CSR in CA. We are also having these issues with Travelers home and auto increases. We did a book transfer of a lot of our Hartford business to Travelers last year. This year the renewals are coming in so much higher, so I’m moving most of them back to Hartford. Also got a some non-renewals due to “brush” that I am scrambling to find markets for, because now Hartford doesn’t want them either. So, Travelers new underwriting and pricing strategy may be working in the short term, but let’s see where they are this time next year.

    • October 24, 2012 at 3:27 pm
      Agent says:
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      Not only is Travelers doing the horrendus increases, they also announced that if we have a monoline home, they will be reducing our commissions unless we bundle with the Auto. Thank goodness we don’t have many monoline, but when we look at doing the Auto, their rates are out of line and with companion credits, they still can’t be sold. More policies to re-market. I wonder if they do the same thing on the monoline homes sent to them by GEICO. We have concluded that Travelers is not very agent friendly and it is no wonder their volume with us is in decline.

  • November 3, 2012 at 9:12 pm
    sean says:
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    I used to sell alot of homeowners for Travelers but I haven’t sold a policy thru them in over 2 years. I have placed most of my clients who were with them with other carriers. Their homeowner rate increases are by far the worst of any of the carriers I have seen and I don’t think it is fair for an insured to have their rates go up 40-50% because Travelers is a poorly run company. Their CEO has made it clear they won’t hesistate to gauge their clients to improve their bottom line. Their minimum $1500 deductible for new business is ridiculous and shows how completely
    out of touch they are. I don’t even waste my time quoting them anymore. This will really catch up with them in a few years.

  • November 5, 2012 at 10:15 am
    Agent says:
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    Travelers is one of the few stock companies who do national advertising. They have several good ads they run. The latest one advertises a 20% savings if the customer bundles their coverage. Is this a savings from the increase or a savings over other carriers? I am not sure who they beat anymore even with other carriers taking rate. I am not sure this ad isn’t false advertising.



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