The Road Ahead: Personal Insurance Market Trends

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A title slide. Wednesdays with Woodward (registered trademark) Webinar Series. 

A speaker window sits in the corner of the screen, otherwise filled with a slideshow. A slide shows a laptop displaying the title slide. Logo, Travelers Institute (registered trademark), Travelers, 15 Years.

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JOAN WOODWARD: Good afternoon, everyone. And thank you so much for joining us. I'm Joan Woodward, President of the Travelers Institute. And I'm thrilled to welcome you to our program today. We're really so glad you're here. 

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Slide: 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 the program. Please note that this session is being recorded and may be used as Travelers deems appropriate. 

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Before we get started, I'd like to share a disclaimer about today's program. 

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Slide: The Road Ahead, Personal Insurance Market Trends, with several logos below. 

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I'd also like to recognize our fantastic partners, TrustedChoice.com, the Master's in FinTech Program at UConn School of Business, The National Association of Professional Independent Agents, the PIA, the American Property Casualty Insurance Association, the Risk and Uncertainty Management Center at the University of South Carolina, and the MetroHartford Alliance. So thank you all, and welcome to your membership and your networks today. 

Also, I'd like to point out, as you may have noticed on your screens, this month and for the next several months, the Travelers Institute is celebrating our 15 years of thought leadership. Fifteen years ago this month, in June of 2009, we established the Travelers Institute as a home for thoughtful and constructive conversations about today's challenges and tomorrow's opportunities and needs. Since then, we've held more than 1,100 events-- over 1,000 events in 15 years on topics from distracted driving to cybersecurity education to disaster preparedness to managing risk for small businesses.

We produced an award-winning PBS documentary on the national debt. We issue white papers on autonomous vehicles, and we've actually rung the opening bell at the New York Stock Exchange. We've talked to former Secretaries of Defense about geopolitical risk and crashed a car live on our webinar.

So we've brought the expertise of Travelers' leaders, along with insights from public and private sector experts, to help address the most pressing challenges facing our industry, our customers and the communities we serve through in-person events, webinars and now podcasts. It's been amazing, folks. And I know a lot of you have been along the way for this journey with us.

All told, we've estimated that we've reached more than 400,000 people with our live and in-person programs, webinars and speeches. So more to come on our 15th anniversary shortly. Today, we are zeroing in on the rapidly evolving personal insurance marketplace.

No question, folks, there are challenges in today's personal lines market from increasing cost of products and services to changing customer and employee expectations. The auto and home insurance marketplace and industries are changing. It's imperative that the insurance carriers like us and agents adapt quickly.

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Slide: Speakers. Joan Woodward's headshot appears with two others, with biographical information below. 

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Joining us today are two of Travelers’ Personal Insurance leaders, who will provide insights into how our carriers and agents can successfully adapt to these rapidly changing times and to partner to take advantage of the significant opportunities that we see that these changing conditions present to us. First up, we're going to hear from Bill Zielinski, who is Senior Vice President for Personal Insurance Product. Bill joined Travelers in 2010 and is, today, is responsible for day-to-day profit and growth, managing national underwriting and product management across all of PI product lines. 

He specifically leads strategy and agile delivery for our PI product portfolio, regional, state and national lines of business teams, as well as our critical national underwriting forums, coverage, actuarial and pricing, and risk analytics. So that's a lot. Bill, you're very busy guy.

And next up is my friend Karen Eckert. She's Senior Vice President for Personal Insurance Agent Distribution. Karen joined Travelers also in 2009 and, today, oversees the Agent Distribution Organization for PI, which includes seven regional teams, inside sales, national partner sales teams, agency enablement circles, and home office field sales operations. So that's a lot. These two are incredible leaders for our thousands of employees in PI and across the globe, actually.

So first, we're going to start with Bill, and then he's going to hand it off to Karen for some opening remarks. And then, of course, get your questions ready because we're going to have lots of time at the end of these presentations for your questions. And, Bill, the virtual floor is now yours.

BILL ZIELINSKI: Excellent. Thank you, Joan. And I apologize about burdening you with that very long introduction. Karen and I are super excited to be here today for the conversation, looking forward to going through the content and, more importantly, answering a lot of the questions that I know you all have. And we've seen some of them, and they're really great.

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Slide: Industry Performance, Personal Lines - Total. A yellow line on a line graph spans above and below a horizontal line, from 1995 to beyond 2020. 

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Now, before we delve into recent and prospective views on the industry, we thought it would be really insightful to step back over a roughly three-decade view over time to understand performance. And so what you have in front of you here is a view of combined ratio for the industry represented in that yellow line from 1995 to 2023. Now, while personal insurance industry results have been acutely challenging over the last few years, which you see on the right-hand part of the slide, long-term results have also been challenged, as evidenced by that yellow line being relatively consistently over the red line, the red line representing a 100 combined ratio or underwriting breakeven. 

Now, the underwriting results for our now almost $475 billion personal lines industry came in at 110 and 109 over the last two years, based on Conning's latest projections. There is, however, a historical comparable, believe it or not, in 2000 and 2001, where the industry produced a 110 and a 111, incrementally worse than what we've seen in the last two years. So unfortunately, this is territory that we've seen before.

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Slide: Total versus Auto. An additional gray line is superimposed on the graph in a similar but not identical pattern as the yellow line. 

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Now, moving forward, as we break out the auto line specifically, which is represented in gray, we can see a bit more stability relative to the overall industry results. Now, that being said, auto underwriting results have been consistently challenged in 2022 and 2023, which are forecasted to come in at 112 and 109, respectively, actually represent the worst years in this entire period. The average auto combined ratio over this time has been 101.5. 

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Slide: Total versus Home. A blue line replaces the gray line on the graph. 

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Now, switching gears to property-- property, not surprisingly, has been distinctly volatile. And again, represented in that blue line compared to the overall industry results in yellow, weather plays a very significant part of this story, as we'll see. The difference between the low over this period of 89 in 2006 and the high of 122 in both 2001 and 2011 is a staggering 34 points of difference. And those two years-- 2001, 2011-- were marked with really horrific tornadoes, tropical storms, hurricanes and even winter storms. 

Big picture-- recent results have been challenging, but the industry is not in totally uncharted territory. That said, it really is a rapid shift, the component parts and really the coincident challenges that we see in auto and home that really are different about this moment. 

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Slide: Auto Loss Costs Stabilizing. Key auto inflationary indexes. Two lines trend upward on a graph from 2019 to 2024. One line's slope is much higher. 

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Now, honing into the moment, auto is beginning to show signs of stabilization, as evidenced by this chart, which has key inflationary indices of bodywork CPI and medical services. You can see a dramatic shift in the incline for bodywork, which drove over 30% increase in a large component of the industry's physical damage loss costs. That's represented in the blue line, with that increase occurring between 2021 and 2023. 

Now, fortunately, medical services inflation, a big driver of bodily injury costs, has remained relatively benign over that period. That being said, medical services and social inflation, in turn, will always be a watch for the industry on that coverage line.

But at present, we do see bodywork stabilizing. As you can see, between 2023 and the early part of 2024, that slope has really sedated, and medical inflation remains relatively stable. You put those two things together, along with rate increases that are earning in, and you're starting to see some more healthy returns for the auto line and personal insurance that was evidenced by results at the second half of last year, as well as the public results that were put out earlier for Q1 this year. So it is a safe bet to say that 2024 auto underwriting results will come in favorable to the current forecast from Conning of the 109 from last year.

Now, we won't show it here, but the property line has had similar benefits in terms of stabilizing inflationary drivers, notably related to materials, but still with some pressure on labor, given shortages.

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Slide: Weather Activity Challenging Property. A United States map is dotted with locations, indicating 2023 Billion Dollar Weather and Climate Disasters. 

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Moving forward, we'll see that weather remains the big driver for the results in the property line and is especially top of mind as we're now in the high-cap part of the year. This chart represents $1 billion or greater loss events in 2023. 

If you're really quick, you’d count up to 28. And that's right. We had 28 unique $1 billion loss events in the industry.

That's more fingers and toes than most of us have. You can see it was dominated by severe convective storms really in the central part of the country. But what you don't see is the events were longer, and they were wider in terms of their impact than we have historically experienced.

Now, what you won't see largely missing is wildfire and hurricanes, with the notable exception of the unfortunate wildfires in Hawaii. When we think about property insurance, we think not just about the losses you get in the average year, but also the losses in an extreme year or tail risk. Think the worst that can happen in 1 in 100 or 1 in 250 years.

And when we look at those factors, wildfire and hurricanes really are the biggest drivers. So it was really a bit of a silver lining, if you will, that we didn't have those in last year's weather. But unfortunately, some of the pundits are pointing to a very active hurricane season this year. And unfortunately, from a severe convective storm perspective, we are off to a challenging start as well.

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Slide: Fire Losses. Text depicting statistics is superimposed on a photo of a family watching firelight. 

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But as this slide shows here, it's not just weather, but fire and water losses. First, from a fire perspective, there's some powerful stats that we've gathered from the National Fire Protection Association. We had a fire event in the U.S. in 350,000 homes last year. 

If you do the math, that comes to one in every basically minute and a half. Forget the property impact. It led to 10,000 injuries and, sadly, 2,800 deaths.

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Slide: Water Losses. Text depicting statistics is superimposed on a photo of a rippling waves. 

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Now, on the other end of the spectrum, we have water, which is an issue that's really driven more by frequency. Although water losses carry a lower average claim severity, albeit still substantial at $12,000, we experience a robust 14,000 losses per day based on the Insurance Information for Institute studies. 

Now, if that isn't enough to consider, there are other risks to the performance of the industry and are also drivers of action. So moving forward, I'll call out three--

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Slide: Challenges Abound. Three photos are labeled with text. 

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first, litigation trends; second, climate change; and thirdly, regulatory intensity. 

When we think about litigation trends, it really comes in three parts-- one, nuclear verdicts; two, active plaintiffs’ bar; three, litigation funding. When we think about nuclear verdicts, we look at a very important stat of settlements for U.S. tort liability claims. They increased 14% in 2020, according to the Institute for Legal Reform. So that will drive higher severity in the industry. And when we think about litigation funding, there is significant private equity capital being allocated to legal firms to action lawsuits in very sophisticated ways-- again, another driver of severity.

We already talked a lot about weather, and it seems unrelenting. Now, regardless of your personal perspective, quantitative studies do point to intensified weather because of climate change and, specifically, in wildfire and high-intensity hurricanes. And then finally, regulatory intensity as carriers adjust price, terms and conditions, and manage capacity to address the challenges in the marketplace, regulators are feeling compelled to support consumers, which can introduce new constraints to advancing necessary change in the market or potentially slow down how some of those graduate into the marketplace.

So this may feel like a bit of a horror movie without a hero.

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Slide: A woman in a crowded movie theatre gapes above her eye line. 

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Never mind the ending. Perhaps the better question is, where do we go from here from an industry?  

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Slide: Customer Centricity and Digitization. One photo depicts a smiling woman drinking coffee beside a sunlit window. The other photo depicts a toddler holding her parents' hands in a field. Text, Total smart home users worldwide grew from 163.9 million in 2018 to 360.7 million in 2023 which is a 120% increase and is projected to be 672.6 million by 2027 which is an 86% increase over the next four years.

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Signs are pointing to auto stabilizing and results improving. We're certainly starting to see some signs of appetite returning in the auto marketplace. On the other hand, property capacity will arguably remain challenged given the inherent volatility of the line, which also carries the specter of a capital event via tail risk. 

As we shared in the long-range view, while some elements of the past few years have been truly unprecedented and staggering, the industry has faced these challenges before and adjusted to really remain an effective solution to help consumers protect what matters most, what they've built over the course of years and, in some cases, built over the course of generations.

Before I hand it over to Karen, I want to hit a couple of trends where we see the industry investing. The first, customer centricity and digitization. Yes, you have to match price to risk in insurance, but customer experience in personal insurance, especially, is vitally important as we think about the modern consumer and their expectations. And digitization is not just important to enable consumers to engage how they want, but also to help them manage risk. I'll give you a couple of examples.

In 2023, there were an estimated 300 million smart home users worldwide, which was 120% increase in five years. While the potential benefits of smart home technology to mitigate risk are there, it's largely been elusive for the industry, given fragmentation of the technology solutions and, really, a separation between the ability to identify a risk and to prevent an issue from happening. It's an area of opportunity, and carriers are investing.

On the auto side, cars are increasingly connected. Connected cars represented about half of the sales in 2022. Connected cars do present the opportunity to influence better driving while, from an insurance standpoint, providing ground truth input to underwriting and pricing. Now, of course, recent events have shown us the importance of customer centricity as we think about communicating, gaining consent and transparency around that connected car and connected car data.

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Slide: Technology, Data and Analytics. Text sits above two photos, depicting a bird's-eye view of a cul-de-sac and a row of sleek mainframes in a storage room. Text, The global big data market revenue is forecasted to eclipse $100 billion by 2027. 

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Moving forward, we could have a whole separate session on technology, data and analytics. And in fact, I think Joan's had a few already this year and likely will have a few more. Simply put, we can do things that we couldn't even imagine a few years ago. And the future will arguably unlock even more dramatic data and analytics capabilities, especially as we think about generative AI. 

Again, an example-- today, data providers have high-resolution images of approximately 80% of the homes in the U.S. That's great. That's a lot of images that would take an army of people to look at. But you can now couple those images with artificial intelligence and operate with them at scale.

Now, this is an area that we at Travelers have been investing in for years and already incorporated appropriately into our business and will continue to do so. Much like connected car, it is a hot topic with consumers in the media, which, again, reinforces the importance of customer centricity and experience when developing any solution. Now, with this, I'll say, of course, you can buy data and tech, but it's really only valuable if you have the right experience and the right expertise to leverage it effectively.

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Slide: Risk Mitigation. Text sits above two photos. A man holds his cell in the driver's seat of his car, beside a photo of a street of similarly designed suburban houses. 

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And the final trend that I'll hit is risk mitigation. Now, I know we have some questions at the end, which we'll get to to delve a little bit deeper into the subject. But according to Bankrate, $20 billion is spent on average each year to repair homes. 

As we shared a little bit earlier, those numbers feel like they get bigger each and every year. There is a significant opportunity to build right and prepare right to help mitigate the potential damage in the face of what feels, again, like unrelenting weather.

Mitigation and preparedness is important. And studies show that for every dollar spent on hazard mitigation, there's an opportunity for up to $6 in future disaster recovery cost saves. We, along with others in the industry, invest in institutes like the Institute for Business and Home Safety, known as IBHS. They do the science, they develop the standards, and they work collaboratively to introduce new requirements and codes for both homes and communities, which can be a significant opportunity to mitigate risk-- so truly an opportunity here.

With that, let me hand it over to my partner, Karen Eckert-- again, Senior Vice President for Personal Insurance Agent Distribution-- to get a deeper look into consumer trends and how agents can not only adapt, but lean into those market trends.

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Slide: Cost of Insurance as percentage of income. A bar chart depicts premium, income, and premium as a percentage of income, from 2019 to 2023.

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KAREN ECKERT: Thanks so much, Bill. Good morning and good afternoon. I want to spend a few minutes today talking about both the consumer and the independent agent. 

Bill did a great job sharing the changes in the industry and the pressure on loss costs. And as a result, customers are paying more now for insurance than ever before. And this chart shows the cost of insurance as a percent of income. The blue bars represent the average premium change year over year, and the gray bars represent the average income change year over year. After remaining relatively stable for several years, the cost of insurance as a percent of income is about 5% and has risen sharply. And it's happening at a time when many are struggling to afford it.

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Slide: Consumer Perceptions. A chart shows the negative and positive perceptions of several institutions from Small Businesses, most positive, to Corporations, most negative. 

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In addition to affecting the wallet, it's not surprising that consumer perceptions are declining. This bar chart shows consumer perceptions by industry from both a positive and a negative perception. You can see at the bottom of the chart that consumer perceptions of financial institutions and large corporations are significantly more negative than positive. 

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Slide: Net Promoter Score Trends. The change in scores from 2022 to 2023 is depicted. Retail and Hotel is a positive change, with other industries trending negatively, including auto/home insurers, credit card issuers, investment firms, health insurers, airlines, and utilities. 

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Another measure of consumer sentiment is the net promoter score. The net promoter score is a global standard, capturing a customer’s-- a company's relationship and experience with its customers. It's a leading indicator for growth and measures loyalty, retention and customer referrals. It's one question. How likely are you to recommend a brand to friends, family members or colleagues? 

You can see by this chart that for most industries, the net promoter scores are trending down. The inflationary environment and rate actions are showing up in some of our customer relationship surveys and net promoter scores. Customers' willingness to recommend almost any financial institution is waning, including their auto and home insurance company.

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Slide: Agents Indispensable Role. Three graphics depict the role of the agent.

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And while the trends and perceptions seem daunting, it's not all doom and gloom. We know that independent agents play an indispensable role in helping customers navigate this complex environment. Independent agents are uniquely positioned for these times because they offer choice and provide trusted advice. Today's consumers demand choice and need advice. 

We've seen many property and casualty firms move to a choice model, either through acquisition of an independent agent carrier or through a change in their distribution model. In this environment, with customers paying more for insurance than ever before, the role of a trusted advisor is more important than ever. Clients need information, advice and support. And independent agents help customers in many ways.

First, they educate the customer about what's going on and share the current market realities that we just heard from Bill on. They also proactively reach out to offer reassurance and provide expert advice, which is critical to both retention and loyalty.

And finally, they offer solutions. This is the differentiator, the strength of the value proposition and, quite frankly, what a 1-800 number and the web cannot do. Our research shows that this is a time when consumers are more likely to seek choice and expert advice-- two value propositions unique to the independent agent channel.

Offering choice and providing advice is foundational to the channel, but it's not enough, as we've seen the need for the independent agent to adapt to some real changes happening in the environment. First, the need to continue to adapt to the changing consumer. Millennials and Gen Z will make up 65% of the workforce by 2030. Both are digital natives who expect speed and efficiency. It's important to meet these customers where they are.

We must also recognize the significance of the changing demographic and transition to new and additional ways of building trust, providing advice and adding value. Digital engagement used to be limited to having a website, being found on Google and getting reviews, but now it's encompassing the entire insurance life cycle from point of consideration to research to selection to purchase to retention and to loyalty. According to J.D. Power, just 25% of insurance shoppers make their final purchase online. This is despite 74% of consumers researching insurance purchase online, which highlights the important role agents play in the purchase process.

Digital engagement requires an investment in time and resources. Smartphone ownership is nearly universal. Americans spend three hours and 30 minutes per day on their smartphones. Phones are the hub for communication, the source of social media consumption, our wallets and entertainment portals. They're an essential part of daily life for most of us.

Regardless of your age or generational cohort, consumers want and expect digital engagement. And today's customers value relationships and education. They just want to consume it differently. And that's online via websites, using social reviews and social media.

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Slide: Market Share by Distribution Channel. Change in Captive, Independent Agent, and Direct channels is depicted. 

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So how is the independent agent channel doing? The independent agent continues to succeed. A clear proof point is market share by channel. When we look at market share by channel relative to the captive channel and direct channels, the independent agent channel remains strong. 

This chart shows the changing market share by channel from 2018 to the 2023 year-end estimate and the '25 estimate. We get our actual year-end 2023 numbers late this month or July, so we're looking forward to updating these numbers.

The arrows represent the change in share between the 2023 estimate and the 2025 estimate. On the top is the captive channel. You can see that the captives continue to shrink, losing over 1 full point share over the entire time period. On the bottom is the direct channel. The direct channel is projected to shrink after decade of growing share as a result of the challenged auto environment.

And in the middle is the independent agent share, the only green arrow on the page. Our estimate for 2025 has the independent agent channel holding similar share as the captives. While home has historically driven the share growth, we do expect auto to drive future growth. All research shows the independent agent channel continuing to thrive. The independent agent delivers on customers' expectations of choice and trusted advice.

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Slide: Navigating the Market. Bulleted lists depict Customer Affordability and Agent Response. 

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The independent agent is uniquely positioned to help consumers during this time period. And there's two ways-- one, from a customer affordability perspective, and second, how they're responding to the changing consumers. First, helping the customers from an affordability perspective-- risk sharing is extremely important, especially as we talk about the property market. Independent agents can talk through property deductible options with clients and terms and conditions to help make the policy more affordable. 

Bill talked a little bit about telematics. There is a good percentage of customers who want to pay for insurance based on how they drive. They're safe and conscientious drivers, and that can materialize in real savings on their auto insurance. Coverage reviews-- it's important to review coverage annually to ensure that you have the proper coverage for the risks you are facing.

Multi-line discounts-- it's another great way to save on insurance. As rates were increasing over the last year and a half, there's a lot of information published on unbundling coverage to save money. We didn't experience that in our results.

As most carriers have passed through rate increases, it would be important to revisit bundling. There's meaningful discounts for the second and third line of coverage. And you can also see payment options. There's different rates and fees associated with the terms in which you pay.

So while the channel is growing, the independent agent needs to continue to adapt and evolve. Digitizing the entire customer journey from research to purchase to engagement, retention and building loyalty is important to sustain and meet future consumer needs. Social engagement is key.

It's important to build, maintain and nurture digital relationships through ongoing social media engagement. Success comes from being active across all social platforms-- Facebook, Instagram, X, TikTok, and LinkedIn. By using automated campaigns, digital ads and posts with both insurance and non-insurance content, you will reach all generational cohorts.

In addition to social media, reviews and recommendations matter. Online reviews are extremely important. We all check restaurants, salons and hotels to make sure they have a good review before we go to them.

People are also checking agency reviews. The volume of reviews matter, but so does the quality. Quality is made up of the overall star rating, the volume of reviews, the recency of reviews and reviewer credibility. Do customers leave comments and testimonials about your agency?

Promoting self-service is extremely important. In times of uncertainty, people want control, and the ability to self-serve is really important. We all shop online, bank online, do financial planning. Giving access to information and the ability to self-serve gives a sense of control. This is an opportunity for the channel and one we need to continue to embrace and move forward.

Investing in technology is important as we talk about digitization, finding solutions that make the agency more efficient and effective, whether it's APIs for new business flow, the use of artificial intelligence to cover routine tasks or streamline workflow, leveraging vendor data to get insurance verification information to streamline the quoting process, there's so many ways to invest in technology and tech stacks. Also, texting quote to shorten the sales cycle. There's many ways to leverage and streamline workflows.

And finally, focusing on the customer experience-- it's critically important to collect and understand customer sentiment and track the net promoter score to continue to build trust, deepen relationships and create loyalty. These are just a few of the ways we can navigate this market together. And now I'll turn it back to Joan.

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The three speakers' video feeds fill the screen. 

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JOAN WOODWARD: OK, terrific. Karen and Bill, that was just really eye opening, that flyover of the marketplace and the dynamics you're seeing. And it does sound like obviously there's challenges, but there is some opportunities. And I really like the way you talked about those, so thank you for that. 

We're going to get into lots of moderated discussion now. But before we do that, I always like to take a pulse of our audience. So, audience members, look at your screens, and we're going to ask you one polling question, which is, what is your biggest challenge today in writing personal lines? So lots of different options here.

If you would just do one for us, choose one, that would be great. What is your biggest challenge? And I know we have some thoughts about what the biggest challenge is. And depending on what state you're in, of course, that's also another factor in determining some of your challenges. But let's take a look.

So it looks like changing consumer needs is definitely up there. But the biggest one-- and we have guessed it this one-- but market access and capacity. This is an issue, obviously, we take very seriously working with the different state regulators to ensure that we can give as much market access and capacity that we have within ourselves at Travelers.

But it's an industry challenge. And so, Bill, why don't I just ask you, why don't we comment on this right now? Because the changing consumer needs-- actually, I'm glad to see attracting talent is not one of the bigger challenges. I think that during COVID, we pivoted and navigated through emerging talent and retaining and attracting talent to our industry. So actually, why don't I just go to Bill? Because what is Travelers doing really to help agents navigate this marketplace today? Specifically, what are we doing, Bill?

BILL ZIELINSKI: Sure. Yeah, I'd be happy to answer that. And I tried to answer the question, but without a multi-select, it was impossible to answer because there are a lot of challenges out there. But in terms of helping agents to navigate the market, I think navigate's a great word.

It's a little bit choppy out there, but our approach has really been to take it head-on and really to navigate together in partnership with our agents. And I'd say, we, like always, are really focused on helping both in the near term and in the long term. We think that's a really important balance to strike, the near term and the long term. From a near-term standpoint, there's some votes for market capacity and access.

And we've been very deliberate in the actions that we've taken. We've also been very transparent about those actions and what the motivations and drivers are for us from a profit and a need to manage growth. We have those conversations with our agents. We provide advance notice.

Importantly, again, we talk about the rationale, so they can understand the business motivation behind it. And we've received good feedback about how we're interacting. But of course, we get some constructive, too. And we take that, and we try to fold that back into how we engage with our agents.

We also try to provide as much as we can around collateral. I saw some questions in the chat about maybe the country map around cats. We try to provide those to our agents as much as possible, along with other things that can help explain to consumers what's driving inflation in insurance.

We have tools that help our agents understand as premium is changing from term to term, what sits underneath that. At the end of the day, no one likes when things are happening to them without them knowing why. And so we try to help our agents be equipped to answer that why for our consumers.

And then longer term, we're investing in the long haul. As we talked about, there are market cycles that occur in personal lines and, quite honestly, in all of the insurance lines. We're making concerted investments to modernize what we call our specialty lines to better serve our target customers and improve efficiency for our agents. Those are liability coverage, personal article floaters, boats, yachts, all the things in addition to auto and home that our consumers need to have protected and covered.

We're also-- which I'm sure we'll talk a little bit more about-- developing another iteration of our telematics offering, which has better experience and better match of price to risk. And of course, we really just constantly focus on tuning our underwriting and pricing, so we can remain a market leader for our agents for years to come.

JOAN WOODWARD: That's great. Thank you, Bill. So, Karen, I want to turn to you. And I know this is near-and-dear to your heart, which is talking about digitization, and the digital economy and how agents really need to lean into that. I love what you said in your opening about-- and I personally experienced this through my LinkedIn. If folks are not connected to me on LinkedIn, please reach out-- but providing content that is not insurance-related, right?

Just human interest stuff, or attracting and retaining talent strategies, or Gen Z, Gen Y, working with different generations and speaking to those generations in non-insurance speak. I found that really eye-opening for me in my LinkedIn journey. And I think that the tips you're now giving our agent population to do that in their own channels is invaluable.

And not a lot of people are talking about that in the insurance industry. It's always, let's talk about the insurance product, and the rate and why things are so expensive. But I love how you think about that for agent LinkedIn and Facebook and everything else to acquire more customers. But overall, what is Travelers doing really to help agents digitize?

KAREN ECKERT: Yeah, I'll start with that, Joan, because we know that to build a relationship, you're not going to build a relationship talking about an insurance product. You have to relate to people. So one of our most widely used tools by our agents is toolkitPlus. And toolkitPlus is our resource for all things digital marketing.

It's marketing resources to help agents build an online presence, there’s social media campaigns and SharePoint posts to support insurance and non-insurance content. We have over 3,000 pieces of curated content in all forms-- video, social, email. And we provide guidance on search engine optimization, how to collect online reviews. We offer an online review tool. We also have a partnership with the vendor that gets agents deep discounts on texting and collecting reviews.

But one of the things we've had out in market but we're stepping back and reevaluating is we had a self-assessment for agents to see where they are in the complete digitization journey. And so we're revamping that agency assessment to better reflect what it means to be technology-enabled or digitally connected. And so we're going to launch that this year, have agents take a self-assessment and then based on those results, create individual action plans and solutions for agents based on their maturity level.

A couple other things we're doing from a digitization perspective is we do have API integrations where we have a quote issue process using APIs for our new business auto and property forms. And we're just starting the work on service integration. That also allows for embedding for those agents who embed.

And then another-- I think another great investments we're making in Personal Insurance is self-service. Self-service for customers is super important. Our investments in the MyTravelers website and the mobile app where customers can make payments, process changes, file claims, and customers are doing it-- so really, really a holistic approach to the insurance journey and how we're investing in digitization.

JOAN WOODWARD: OK, that's great. Thank you, Karen. I want to stay on you, Karen, just for a second and talk about another technology that's a little scary, which is specifically AI. It's rapidly evolving, not just in our industry, but it can be a little intimidating. And when you say to agents, use AI to help your business, what are some concrete examples of how an agent can today use an AI tool to make their jobs easier? So what are the maybe one or two things, the top things, if an agent out there that has not even tried it-- because it can be intimidating-- how do you advise our agent partners to use AI in their business?

KAREN ECKERT: Yeah, that's a great question. We do see agents using AI for content creation. So they'll use ChatGPT to help draft different types of content. So it starts as a reference point for them and a baseline for drafting. But some of the content would be job descriptions, blog posts, email campaigns, templates for communications to frequently asked questions and marketing and recruitment messages.

Another way we see agents using it is for call and meeting transcripts. So recorded calls or meetings are put into ChatGPT and summarized. And this allows for clear meeting notes that can be saved and distributed for future reference across the agency. And then the call transcripts can also be summarized to identify commonly asked questions to help build best practices, like FAQs.

And the last thing, what agents use it for, and I use it for as well, is customer sentiment. So agents can collect customer reviews and put them into ChatGPT and get a sense for where they're meeting expectations and where there's an opportunity for improvement. And we have an agent NPS where we collect sentiment about how our agents feel for us, and we get verbatims quarterly. And I've used ChatGPT to give me the common themes of what we're doing well and what we can work on.

JOAN WOODWARD: Actually, I want to pause and just put a little plug in for my friend, our Chief Technology Officer Mojgan Lefebvre. She saw-- way down the pike, she saw a need for us to beef up our technology centers. And so we just opened a Center of Excellence in Atlanta. So if any of you are looking for technology spots in the insurance industry, we are hiring in our new Atlanta tech space. It's a very cool Silicon Valley vibe there in Atlanta.

So please, look on our website for job openings in the technology space. It's a great place to work. That team is led by just amazing data scientists. So anyway, just a shout out there.

But let's get back to the customer because I've heard you both say at one point or another that, quote, "we need to meet customers where they are at," end quote. What does that mean to you, meeting customers where they're at? So maybe put it in the Amazon context of how Amazon thinks about a customer. Should we be thinking about that customer in the same way, where everything needs to be seamless, and immediate and transparent? What does this really mean for Travelers? Bill or Karen.

BILL ZIELINSKI: All right. Yeah, I was giving Karen a shot. And I think, much like most families or households across the country, Amazon's quite often arriving at my doorstep. And so, yeah, it is a pretty seamless component of our lives. But when we talk about meeting consumers where they are, I'll hit on a couple of points, and I'm sure that Karen will add in.

Karen had talked about some of the APIs. I think, first, it's about providing digital access to our products for our customers and for our distribution partners. I think it also means having the right coverages for our customers for whatever given stage of life they're in. And this comes through in a number of different ways for us.

One really good example is the customization capability in our Quantum Home 2.0 property solution and also in our specialty portfolio. It really allows us and our agents to provide the right coverages for possessions, liabilities, or things or even special events. It's wedding season after all. So that's an important component part of it.

And probably, the last thing I'll hit for agents-- it means really understanding and continuing to adapt to the changing consumer. Certainly, populations and values are shifting. Perhaps people are buying homes later in life. Perhaps they're delaying buying a home forever. And so really just understanding that dynamic, how things are changing, and building that trusted partnership and confidence, and helping them to be educated, and to buy the insurance that’s right for them today and that can adapt to their life for the future.

JOAN WOODWARD: OK. And, Karen, what about the bundling? You talked a lot about that at the point of sale. How can agents navigate that?

KAREN ECKERT: Yeah. I think it's important that when you think about the changing demographic, and you mentioned it, Joan. Customer needs and sentiments are formed by other purchase and service experience they have.

And so keeping a pulse on that comes from proactive outreach to current customers, establishing multiple ways to get feedback from customers, such as online reviews, Facebook, NPS surveys. So I think staying informed about what customers' needs are and how they change. And the best way to do that is straight from the customer, is to understand the needs and wants.

JOAN WOODWARD: Great. So let's shift a little bit because I want to talk about something that's near-and-dear to our heart at the Travelers Institute. We've worked for many years, probably a decade, on reducing distracted driving and through our Every Second Matters campaign.

And so a number of our agents out there have been terrific partners in trying to raise awareness about the dangers of distracted driving. But, Bill, there's the telematics program. Ours is called IntelliDrive. But how do you get agents to help customers understand the value that that brings to their personal lines journey and to embrace telematics more? What is the pitch for agents? What is the data case that you've used to show how important telematics can be to reduce distracted driving and fatalities?

BILL ZIELINSKI: Sure, great. And first, we certainly do appreciate the partnership with the Travelers Institute over the years and especially the program, Every Second Matters. It's been an incredible success.

And distracted driving doesn't just impact business results. It impacts people that may have been injured or even lost in accidents that could have been avoided by not using a phone while driving. So we take it very seriously from both of those dimensions.

When we look at some of the survey results that we do with the Travelers risk index, it continues to show that consumers are really concerned about distracted driving. So it is top of mind. Now, the good news and part of the pitch for our IntelliDrive program is that we're finding that telematics users in our program have a reduction in distracted driving of up to almost 20%. So the presence of that telematics program is really influencing behavior, which after all, is really what we're after.

So regarding adoption, we continue to promote it as a program, not only from a distraction standpoint, but other-- influencing other, better driving behaviors. And ultimately, as those driving behaviors come through, it allows us to provide a better price point for our customers. And while we spent decades, like other companies, building incredibly sophisticated pricing plans, what we found is that driving behavior is incredibly powerful even on top of it. So really, one, it will help to bring top-of-mind better driving behavior and, two, really help to put the right price for better drivers in your hands.

JOAN WOODWARD: OK, great. I know it helps with teenagers, too. I went through that a while ago, and it definitely-- if they know they're being tracked, it's not a bad tool for mom and dad to talk to them about, too. Let's shift because I want to talk about property. We have a number of questions coming in, and we're going to get to as many as we can.

So the property lines, climate change obviously remains a risk. How can agents really help those customers mitigate our climate risk when it comes to their property? So, Bill, what is the two or three things we can help our agents talk to them about property risk?

BILL ZIELINSKI: Yeah. As I touched on a bit in the presentation, it definitely starts with building the right way, which sometimes is an opportunity. And we partner with IBHS, which has developed incredible science to help inform more resilient construction. And they've developed things called FORTIFIED standards, and they've been proven to be more effective in inclement weather.

And as a trusted partner, if you have a customer that's looking for a home, maybe building a home, I think helping to educate them on the value of that type of construction is really important. After all, builders will build where there's consumer interest. And then getting back to once you have a home, there certainly is opportunity to prepare and to mitigate. Studies have shown, again, $1 invested in hazard mitigation can translate into over $6 in savings in the face of a disaster.

A couple of examples that we often think about when we think about wind and wind-driven rain perils in particular, it's the roof. When roofs fail, it can create a cascading set of failures. So reminding consumers of the importance of roof maintenance and also, quite honestly, repair cycles. There is a lifespan on roofs. And the effectiveness really starts to wane as they get older.

And as we think about hurricane zones, preparedness certainly can come in the form of what you'd think more traditionally, like storm shutters, making sure those are in place on a home, being proactive and removing trees that could fall or damage your home. These are a lot of the things that we think about. Other examples would include making sure that you have defensible space if you're in an area that-- that's more prone to wildfire, meaning removing vegetation and other things that could carry a fire to your home. So those would be a couple of examples that we would share in terms of education for consumers that are either buying a home or looking to appropriately maintain or renovate.

JOAN WOODWARD: OK, excellent. We're going to do rapid fire here. So, Karen, I hear you talk a lot about future-ready and getting our agent population future-ready. What does that mean? Or maybe give us one concrete recommendation for an agency to embrace to compete with those direct writers and implement in their agency tomorrow. What would you give the one piece of advice to be future-ready?

KAREN ECKERT: I think the one piece, because it's all across the journey to be future-ready, the insurance journey, I would say, establishing that feeling of connectedness and self-service. So I would push and stress the importance of downloading the mobile app for every piece of new business and every renewal conversation. As an agency, I would encourage the customer to download the app and use it. And the agent's still present to educate and advise on risk protection, but this goes to ease of doing business and the efficiency, which consumers want.

So many service tasks can be done via the app or online. So it's going to help with agency staffing as well. And we should see big changes over time with millennials and Gen Z having a much greater preference for self-service. I mean, you can do almost everything on an app on your phone. And people like that, and we should continue to promote that.

JOAN WOODWARD: OK, good. Let's stay on those college graduates, Gen Z, millennials, other younger folks. How do we attract these folks to our industry? So, Bill, maybe you first. It's always top of mind. I have lots of webinars on attracting and retaining talent in the insurance industry.

We partner with a number of schools and risk management colleges and universities out. They do amazing job with our young folks. But how do you, Bill? What's your pitch? Give us a pitch of I'm a recent college grad that may or may not want to go to investment banking or finance or thinking, oh, the insurance industry could be a great career as well.

BILL ZIELINSKI: Yeah, that's great. And we know talent drives business results. So the first thing we always talk about is insurance is there when people and families need to protect what matters most. We have the opportunity internally to read a lot of stories about how our claim team has come in and helped customers, and it really reminds me of our purpose.

So we talk a lot about that when we talk to recruits. And last year, publicly, we had an advertisement campaign, "Remarkable things happen when people care." And I think it just really helps you to understand the mission and the purpose of insurance and what we're really all about at Travelers. So I start there.

The second is it actually is really a dynamic industry. I know when I first came in insurance, I'm like, oh, it seems kind of conservative and stable. Well, if you heard anything about what we talked about today, it's not. Relationship management, digital distribution, customer experience, technology, advanced analytics, and so on. So our pitch is, if you're interested in a field, we got it.

It's not boring. That's for sure. We even have a chief medical officer at Travelers. So that's our pitch. If you're looking for a career in a industry that matters, it's hard to go wrong with insurance.

JOAN WOODWARD: OK. Karen, what about retention? What is your pitch to get people to stay in this industry or not go to a competitor across the street for another $5,000 raise? I mean, what is the retention pitch?

KAREN ECKERT: I think we spent a good chunk of our time and lives at work. And so creating growth opportunities and challenging assignments are basic and foundational. But at the end of the day, you retain people when they feel valued, when they're trusted, and they have a feeling of connectedness, like Bill cited. We're protecting things that matter most to people. So at the end of the day, it's about that, making sure the team feels valued and trusted.

JOAN WOODWARD: OK. Let's get to a bunch of audience questions. So, Bill, this is going to be for you. This is from Tom Ward in Illinois. "How do we, insurance industry, help the building industry with better building materials and devices to mitigate claims."

So I know, as you said, we're a member of the Insurance Institute for Business and Home Safety, of which, by the way, in July, we're going to be down doing a live wildfire burn and hail exercise. So catch us in July. I think it's July 24. We'll be at IBHS with all their cool technology. But how do we, in the industry, Bill, help the building industry and materials industry to understand better products?

BILL ZIELINSKI: Yeah. I think that's a great question, and it's one that we've been partnering in on a journey to do. I think, first, the trade associations, they have a great impact and great gravity. And I think working through the trade associations at a national and a local level, really, to drive the application and adoption of some of those building standards is really important, especially in some core geographies, either on the Coast or in areas which are higher risk. As I talked about, I think advocating to customers to understand the value of some of these different ways to build more resiliently-- I think that ultimately leads to demand, which ultimately gets to the builders.

And I think, finally, as leaders in communities, which almost-- many of our agents are, really just speaking to the importance of, from a community standpoint, thinking about mitigation. It can happen in terms of open space, defensible space, ignition-resistant buildings, landscape treatments, etc. So I think there are a lot of ways, and I think there are many ways that we have to push on that together to get movement over time.

JOAN WOODWARD: OK. Thank you for that. So, Karen, this is going to be for you. Danny Briley asks of Melo Insurance, "What's one thing that you see that just about every agency could stand to improve upon out there?" What's the one thing? I know you've given us actually a bunch of things that they could work on, but what do you, in your view, to be future-ready, maybe?

KAREN ECKERT: Collecting reviews about the business, generating a credible volume with good ratings and testimonials, recency. And link them to your website and other ways you advertise because-- and, of course, address negative reviews or negative sentiment. But when you look at agents' reviews, there's a smattering of none to really great volume and testimonials. But that's the one thing I would recommend.

JOAN WOODWARD: OK. Let's talk about litigation trends with Aaron Whitehouse. Aaron asked, "Regarding the litigation trends data chart you showed, what things are members of the industry doing to try to reverse this ugly trend? And how can agents help the cause?" Bill, do you want to take that one?

BILL ZIELINSKI: Yeah, that's a good one. I think there are elements of reform, and we've seen that in one state, Florida, as an example, where there were some regulations that really encouraged some of that activity, which wasn't, at the end of the day, helping consumers with a better outcome, but it was creating a lot of expense within the system. So I think, one, there certainly are certain states where some of the regulations can be better positioned to make sure that, really, we're taking care of customers in the right way and not introducing additional expense into the environment.

I think, also, educating consumers about, you may not get a better outcome by engaging a lawyer. We have plenty of statistics around that. And as Travelers, we're very focused on paying what we owe. That is our commitment, that is our contract. And in a number of cases, engaging with litigation doesn't translate to a better outcome.

JOAN WOODWARD: A better outcome. Yeah, there's a lot of industry data on that as well. We at the Travelers Institute intend to take on a more active role to talk about social inflation and litigation costs to the consumer. I think the U.S. Chamber of Commerce says something like $3,600 per person in the United States is the cost of all the litigation that goes on in the country. And so that's a tax on consumers that, again, we have an obligation to try to reduce that by educating people.

OK, one last question here from our audience-- so maybe, Bill, to you. Erica Coutu asked, "My customers often say they are paying for claims in other parts of the country for their homes and property insurance. How can you help us respond to this question from customers?" I do hear this a lot.

BILL ZIELINSKI: Yeah. At the end of the day, insurance is a risk-sharing mechanism. Now, over time, that risk sharing has become better and better in terms of creating segmentation within that. I would say, as we look at the insurance industry, it's regulated at a state level. So when we think about pricing, when we think about terms and conditions and the way that we operate, all of that is engaging with the state.

And whenever there's a product with scale, the evidence for pricing, the evidence for underwriting actions is really driven based on the experiences within that state. Now, there certainly are going to be some exceptions with smaller product lines. But by and large, what the regulatory bodies are there to do is to ensure that in an individual environment, that we're working to get a price that's adequate but not excessive.

JOAN WOODWARD: OK, terrific. Well, listen, our hour has just flown by. And I invite you back to our show in the future. This has just been amazing-- a lot of questions about whether the slides can be shared so we'll work on that.

And I do have some closing remarks about other programming upcoming. But first, let me thank you, Bill and Karen, for your time-- really, really insightful and actionable items for our agent partners. So thank you both.

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BILL ZIELINSKI: Thank you. 

JOAN WOODWARD: All right. So now, if everyone could, we have a survey to today's program. Please tell us what you thought about the program and other upcoming topics you'd like to see in the future. Also, if you're a podcast person, we have a new podcast. The Travelers Institute Risk & Resilience is now available on Apple and Spotify, so subscribe today.

See the link there in our chat.

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Slide: Logo. Travelers Institute, Risk and Resilience. 

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And other programs upcoming-- we have an exciting lineup over the next few weeks. 

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Slide, Text, Upcoming Webinars. Register, Travelers Institute dot org. June 26, Beyond the Surface: Insights from Middle Market Decision Makers. July 17, Geopolitical Risks and Global Hot Spots: A Conversation with Dr. Richard Haass, July 24, Wind, Hail, Rain, Fire: LIVE from IBHS! 

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June 26, we are going to look at the inside of the middle market with Scott Higgins. He is our fearless leader of all things middle market and commercial lines. So please join us on June 26. 

On July 17, we're going to pivot and look at geopolitical risk with veteran diplomat Dr. Richard Haass. He's an amazing commentator. He's worked for seven different presidents, Republican and Democrat. He has seen it all around the geopolitical risk. And he'll be with us then on July 17.

And last but not least, we're actually in Chicago today. So tomorrow, if you live in the Chicagoland area, it's not too late to join us.

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Slide, Text, Cyber: Prepare, Prevent, Mitigate, Restore (registered trademark), National Cybersecurity Education Tour. Six dates are listed, with the first four checked off. Register, Travelers Institute dot org. 

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We are at the Westin Lombard, and we are going to have a program at lunch around cybersecurity. So join us there.

You can register on our website, TravelersInstitute.org. And if you're in St. Louis next week, please also join us in St. Louis. We'll convene the speakers, experts in government and private sector. Please join us tomorrow in Chicago or St. Louis on June 27. 

So as always, you can listen to all of our replays. 

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And it's great to be with you. It was a terrific conversation today.

Connect with me on LinkedIn, folks. It's JoanWoodward@Travelers. And I put up a lot of content that you can share again with your networks. Have a great afternoon, everyone, and we will see you soon.

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