The Travelers Company Inc. announced that while it will begin more aggressively marketing direct personal lines business over the Internet, the carrier still strongly backs its independent agent channel.
Rather than an attempt to bypass the agent, the move is being made to capture a niche market the company is missing–consumers who prefer to buy direct over the Web, senior management explained.
Joseph P. Lacher Jr., executive vice president for the St. Paul, Minn.-based insurer, said Travelers plans to begin rolling out TV and radio advertising in late spring and early fall touting its online direct market.
He said the initial roll-out will be modest in a few geographic locations as the company learns the impact of its ads. Plans call for an increase in advertising, ramping up to national exposure during the summer.
However, Mr. Lacher said that while the company is planning to push the direct marketing channel to consumers over the Internet, Travelers still strongly backs its independent agents. He said the company is making this move because it feels it needs to address a growing niche market of buyers who want to buy direct online.
"The independent agent system has remained strong and vibrant and offers terrific value to consumers, and we remain big supporters," according to Mr. Lacher.
However, he added, there has been a steady increase in the number of consumers who want to buy direct over the Web in the past 15-to-20 years, and Travelers feels it needs to be a player in that marketplace.
Direct sales, he said, offers a great growth opportunity for the company–one that is not necessarily in competition with independent agent sales of Travelers products because it is a demographic that has no intention of buying from an intermediary.
Offering an online direct channel is nothing new for Travelers, which has featured such capabilities for more than 10 years, Mr. Lacher noted. The change comes with the company's decision to more proactively promote that option among consumers looking to buy auto and homeowners coverage over the Web.
The news should not come as a surprise to Travelers' independent agents, since the company has communicated its plans to agents and held a conference call with them, Mr. Lacher explained.
The initial reaction was very negative, he conceded, but after going through the reasons for the move and the company's commitment to continued support for independent agents, many agents understood, he said.
"It should work out for all of us," he explained, noting that the aim is not to replace agents but expand the company's business in a market already buying online from other carriers.
As a buyer's insurance needs evolve, the need for a trusted advisor will also grow, so online customers could eventually gravitate to Traveler's independent agents, Mr. Lacher predicted.
He said direct market customers will pay the same price for insurance as they would if they had gone to an agent. He also said any customer who goes to the company's Web site will be taken care of, but the company will do nothing to interfere with the independent agent relationship.
While it markets its direct business, Mr. Lacher said the company also plans to continue investing in its independent agent network.
Reacting to the news, Dave Evans, senior vice president for the Independent Insurance Agents and Brokers of America, said many companies are experimenting with new avenues to grow their business. He noted that Travelers is offering a level playing field for agents and its direct accounts. "We are okay with that," he said.
"Travelers has said it is still passionate about its independent agents," noted Mr. Evans. "They just want to be able to serve that market niche that wants to go direct, and it should not be seen as a signal that they are losing confidence in the independent agent channel at all. They are just trying to capture another niche."
In an e-mail response, Diane Fowler, executive director for the Professional Insurance Agents of Connecticut, New Hampshire, New Jersey and New York Inc., said that "in challenging times, every business seeks to increase its exposure to customers. We understand Travelers' effort to gain greater market share by experimenting with alternative distribution systems."
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