• Jan. 31, 2007
• Jan. 4, 2007
• Dec. 1, 2006
• Aug. 2, 2006
Travelers to Expand Direct Sales Program;
IIABNY Holds Discussions with Carrier
(March 5, 2009) — IIABNY has learned that The Travelers Companies has decided to expand nationwide the direct sales program it has tested in certain territories over the past two years. The carrier informed some of its agents of the move at its PI TLC meetings earlier this week. IIABNY staff spoke by conference call this afternoon with Peter Brown, regional vice-president for Travelers, about the program's expansion. He emphasized that the carrier's aim is to capture customers who prefer to buy products online, business that Travelers has been losing to competitors such as Geico and Progressive. Believing that these customers are unlikely to shop for insurance through its agency force, Travelers made the decision to reach out to them directly.
Travelers has been testing this program in the Long Island area and Western New York, as well as other territories around the country, since it began more than two years ago. Brown said that the company is not changing the program's operation in New York. Independent agents who lose an account to the Travelers direct program will receive the first year's commission. The company has "only one rate filing in New York," so customers will not obtain lower rates by purchasing directly. The major difference that agents and the public will see is increased advertising. The carrier has run advertisements for the program since its inception in newspapers, on the Internet, and through direct mailings. Beginning in the late spring or early summer, Travelers will begin promoting it through radio and television ads. Consequently, the program will be much more visible than it was during the pilot stage.
IIABNY President and CEO Dick Poppa expressed the association's desire that independent agents' interests be protected throughout this process, particularly with regard to information given in the advertisements. Brown offered to share copies of the program marketing materials with IIABNY as soon as he receives them, which could be as early as next week. IIABNY intends to communicate regularly with Travelers about the program as it unfolds.
IIABNY will provide further updates as they develop in The Situation Room and IIABNY Insider.
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Travelers Refutes Newspaper; We’re Still Writing HO on LI
(Jan. 31, 2007) — St. Paul Travelers reassured its agents and IIABNY that, despite a newspaper story that appeared in today’s issue of Newsday, the insurer is continuing to write homeowners policies on Long Island, subject to the guidelines it announced in August 2006. Travelers spokesman Pete Brown told Kathy Weinheimer, IIABNY senior vice president of industry relations and education, that he had no idea how Newsday staff writer James Bernstein reached the conclusions reported in the story. Brown also said Travelers would distribute a fax to its Long Island agents clarifying the company’s position.
Last June, IIABNY Insider reported Travelers had created three zones for Brooklyn, Queens, Staten Island, as well as for Nassau and Suffolk counties. Each zone was determined by location or distance from water and established windstorm deductibles. In two of the zones, no new business would be written. New windstorm deductible maximums, a limit on business income coverage and a 72-hour deductible would also be applied on renewals in two of the zones. At the time, the insurer had rescinded all quote, issue and binding authority for its IENet, Master Pac and Pac Plus policies in the five areas.
Travelers adjusted its underwriting guidelines again in the fall, adopting mandatory 5-percent hurricane deductibles in Suffolk and Nassau counties. The changes for new business went into effect Sept.4, 2006. Renewals were subject to the underwriting changes starting last September.
Today’s Newsday story cited a Travelers spokeswoman and her comments that the insurer had decided to stop writing homeowners policies on Long Island after a routine review of its “risk exposure.” Non-renewals, according to the spokeswoman, would be spaced over the next three years, and policyholders would receive 90-day notice of cancellation. Brown emphatically denied the substance of the newspaper’s story.
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Travelers Explains New Profit-Sharing Program During Call
(Jan. 4, 2007) — Travelers agents will have a choice of performance-based compensation programs for commercial lines this year, the company announced today. In a conference call held with Travelers agents across the country, Chairman and Chief Executive Officer Jay Fishman said that agents will have the option of choosing a fixed supplemental commission program for 2007, similar to the program that will apply to personal lines. The company presented that program to its agents in a conference call Dec. 1. Agents who do not select the new program will remain on the traditional profit-sharing plan for commercial lines.
The announcement followed reports in the insurance trade press that Travelers had decided to stop paying contingent commissions. While today's announcement stops short of ending contingent commissions, Mr. Fishman did say that the company expects most agents will choose the new program. He also said, however, that the company has not made any decisions about how it will pay performance-based compensation after 2007.
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Compensation Changes to Dominate St. Paul Travelers Call(December 1, 2006) — A representative of St. Paul Travelers Insurance Cos. Inc. told IIABNY staff today that it is extremely important for the association's members representing the insurer to join a conference call scheduled at 3 p.m. Monday, Dec. 4. Details for participating in the call with Jay S. Fishman, the company's chairman and CEO, are provided in a memo, dated Nov. 30, to its agents and brokers.
Pete Brown, a regional vice president in the St. Paul Travelers Syracuse office, is urging the company's producers to be patient and listen intently during the call as Fishman discusses changes the company is planning to its producer compensation program. Although details are not expected to be released until the end of the first quarter of 2007, Brown said he was optimistic that the changes would be positive.
IIABNY strongly encourages its members representing St. Paul Travelers to participate in the Dec. 4 conference call and for members to continue to closely monitor developments in the producer compensation programs also offered by AIG, Zurich and ACE Ltd. Like St. Paul Travelers, they are prohibited, effective Jan. 1, from paying contingency compensation, including profit-sharing benefits, to their agents and brokers.
Other related links:
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St. Paul Travelers Settles Broker Compensation Probe
(August 2, 2006) — St. Paul Travelers has reached a settlement agreement with New York Attorney General Eliot Spitzer and the attorneys general of Connecticut and Illinois. The settlement, which is detailed in a 42-page Assurance of Discontinuance every IIABNY member is encouraged to read, requires the company to pay $77 million in restitution and fines, and includes producer compensation disclosure provisions that mirror settlements agreed to earlier this year by other companies. It includes the 65 percent contingent commission provision, which means the company agrees not to pay contingent compensation in any line of insurance in which 65 percent of the marketplace (including direct writers and captive carriers) does not pay it. St. Paul Travelers agreed to support legislation and regulations that abolish contingent compensation and/or require greater disclosure of producer compensation.
The company also agreed to give written notice to insureds involved in book rollovers. The notice must state the reason the insured’s policy is transferring to St. Paul Travelers, including any compensation paid to the producer for the rollover, and must give the insured a Web site or toll-free phone number where he can obtain information about the company’s compensation practices and policies. In addition, the settlement requires anyone communicating on the company’s behalf with a consumer or insured participating in a St. Paul Travelers service center to identify herself up-front as a representative of the company.
Related items: St. Paul Travelers news release (Aug. 1, 2006)
IIABA news release (Aug. 3, 2006)
"Word on the Street" podcast (Aug. 9, 2006)
Incentive Compensation Study (May 2006)
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