Good afternoon, everyone, and thank you so much for joining us. I'm Joan Woodward, and I'm honored to lead the Travelers Institute, the public policy division and educational arm of Travelers. As you can see, we are celebrating our 15th year anniversary this year. Welcome to Wednesdays with Woodward, a webinar series where we convene leading experts for really important conversations about today's biggest challenges. We are really glad you're here. Before we get started, I'd like to share, as we always do, our disclaimer about today's program. A special thank you to our partners, the Connecticut Business and Industry Association, the Metro Hartford Alliance, the Risk and Uncertainty Management Center at the University of South Carolina's Darla Moore School of Business, TrustedChoice.com, the National Association of Professional Insurance Agents, and the UConn Master's in FinTech program. Thank you all for being here. Today, we're going to focus on all things middle market. We tend to hear news focusing on the two ends of the spectrum, the small or the large businesses, but many companies, and certainly many of those that we insure, don't fall under either category. For the next hour, we're going to discuss the biggest trends impacting mid-size businesses known as middle market. We've got a hot off the presses Travelers survey of middle market decision makers that we're going to share today, hot off the press. We'll take a look at their shopping patterns and preferences when it comes to insurance and insurance carriers. Joining us today to unveil these results of the survey is my friend and colleague, Scott Higgins. He's the Executive Vice President and President of Middle Market National Property and Business Insurance Field. Scott plays an integral role in the overall management of Travelers' insurance product offerings to mid-size businesses. He began his career here at Travelers as a commercial accounts underwriter. He moved over to national accounts, where he eventually worked his way up to Chief Underwriting Officer for construction. Scott continued to climb the ranks and was named Senior Vice President and President of Commercial Accounts Group, with additional responsibility for excess casualty, public sector, and technology. In 2016, he was promoted to his current role as EVP and President of Middle Market. Scott also works closely with the commercial team in the United Kingdom and in Canada. A warm welcome to all of you tuning in from those regions. Scott has a tremendous amount of experience as a recognized leader, not only here at Travelers, but also across the entire insurance industry. People want to know what he has to say. We are incredibly lucky to have him here today. Scott, thank you so much for joining us. I know you do not talk very much publicly, so it is an honor to have you on the team today. Thank you, Joan, and thank you for, as I've said before, the continued success of this of the webinar. Thanks a lot. Yeah, we are celebrating our 15th year. All summer, we're going to have lots of programming. More on that to come. Scott, we would both be remiss if we didn't talk about one of the biggest weeks in golf. We have to talk about golf, folks. The Travelers Championship wrapped up just on Sunday, and a record-breaking number for charity. We raised over $3.2 million going straight to charity. All the net record proceeds go to our charitable groups. We funded more than 900 over the past, you know, many years that we've owned this championship since 2007, raising more than $30 million. Scott, what are your some of your favorite kind of takeaways from last week? You actually played in the Celebrity Pro-Am. How'd you do? And what'd you think of the week? Yeah, starting with the Pro-Am, I certainly, it's a great honor to be able to do that. I categorize success in that event, making sure I don't hit any of the many patrons that were on the course. It was a wonderful day. As far as the tournament is concerned, you know, for somebody like myself who's grown up in Connecticut, it's been an incredible source of pride for the state. You can see that in the crowds. For Travelers, I've been with Travelers for the entirety of my career. I've seen this company grow and the tournament grow. Again, another just incredible source of pride for all of our employees. I think there's a waitlist to volunteer for the event. It's just a wonderful week for all of us. Certainly, the crowd showed it. We had just a great finish and a great champion in Scotty Scheffler. A good, fun week for all of us. Yeah, it really was. To have seven of the world's top 10 players, I think we had 43 out of the top 50 show up. It's really a testament to what Travelers has built here. Having, you know, last year, I guess the fans, it was a fan favorite, voted by all the fans who go to these golf tournaments. We got the prize, I think, also for the players' favorite tournament last year. We are so thrilled to have that recognition. We worked hard for that. It really does show. It was just a great week. I think I was there every day, which, you know, I'm turning into a shallow person if I'm just watching golf constantly. It is what it is, folks. It happened. Okay, enough with this monkey business, Scott. Let's get down to your survey. You surveyed 1,000 middle market business decision makers. Let's get into a discussion about this recent survey. Before we dive into some of the key findings, can you first tell us more about what the survey is and what prompted you to do it? Yeah, thank you. You know, focus entirely on middle market customers. More importantly, it's really the first time we've done anything like this. We had done surveys for distributors and other subjects, but we had never done direct to the customer and direct to the decision maker in a blind format. We took advantage of our incredible enterprise market research group and did just that, a blind 15-minute online survey of over 1,000 decision makers to try to get a sense for what motivates them and why they buy and how their decision-making process works. A little bit of context in terms of how we define mid-size businesses. For us, it was companies that employ, say, 50 people to about 1,000. We targeted almost all the industries that you can think of: construction, technology, transportation, all of the manufacturing, SIC codes, healthcare, retail, real estate, professional services, banking, and others. A fairly comprehensive look at, you know, a market demographic that has $152 billion worth of premium. I noticed in your opening, you commented, you talk about national accounts and you talk about small. Middle market is an enormous amount of premium volume in the space. 88% of that premium is bought on a guaranteed cost basis. For those listening out in the audience, I know everybody knows what that means. That is an important point as we start getting into some of the findings as we move through this. The other consideration that is really important, middle market continues to grow. It has a projected three-year CAGR of about 7% by 2026. This is a demographic populated by 300,000 middle market companies. Obviously, those numbers are a little bit related to how we define the definition of middle market. Either way, it is a significant part of the U.S. economy. We, like I said, wanted to get a real good sense for what the buying patterns were for our customers. All right, let's get into what you learn, starting with the buyer preferences, as you say. How much of a role does price play when middle market buyers are shopping for insurance? Because we hear about price a lot. Yeah, price is certainly relevant. What I thought was most interesting here is that more than half of the respondents were very clear that price is the reason that they would shop or seek a bid or an alternative. Having said that, only 6% of the buyers actually purchase insurance on price alone. You can begin to see very clearly that the middle market buyer is not buying a basic, inexpensive insurance product. In fact, it's quite the opposite. We've got two-thirds of the respondents define value as working with external business partners and vendors. They want the best products and services at a fair price. We even had another 11% say that, you know, value is most important, that getting the best products and services no matter what the price. It really is a powerful set of metrics that are putting priority on products and services and making it the forefront of their decision-making. I do not think that is necessarily a surprise to me. Our group did react to the percentages and how high they are. You get a real sense that gone are the days where you simply pay premium and transfer the risk to an insurance company and it pays the bills. That is why I commented that 88% of the buyers in middle market are guaranteed cost buyers. They could simply buy insurance and transfer the entirety of that risk, but they are not doing that. What they are saying is, we are going to buy the insurance, but we have a much higher expectation around what value should be derived for that, what is in it for them. That was really, really important for us. To be successful in the space, you're not only going to be price competitive, but you have to offer products and services that really have a value proposition for the customer. Okay, so putting aside price for a second, tell us more about what the middle market buyer really is looking for then? Yeah, again, some numbers that I want to share. 92% of them are looking for coverage beyond what is basic and inexpensive. That, I do not think that is new news. There is an expectation that terms and conditions are important. 70% of the buyers want carriers they can develop a relationship with. I think the word relationship here really means a trusted advisor. They are looking for a company who can align with their needs. They want to be able to trust that, whether it is the account executive or the risk control consultant, the claims professional, whoever it is on the team, they want to drive a very strong relationship with. 69% want a carrier that understands their business. That same percentage applies to financial stability. They very much want a company that is financially stable. It really connects to this fourth bullet in that more than half are looking for, you know, tangible industry-specific risk management expertise, as well as the experience associated with handling really complex claims. That is what the findings were from our perspective. Okay, so let's dig into that. When a middle market buyer says they want a carrier who understands their business, what can we as a carrier or the agents and brokers listening on the line today, what can we take away from that? Yeah, I think on the relationship dynamic, 70% want that. I go back to those couple words, trusted advisor. That is really important. I think every distributor, agent, broker out there understands the importance of their role in being a trusted advisor for our customers. It feels like the same holds true for the carrier. We're hearing that the preferred engagement model, 70% of those that we spoke with, or I'm sorry, got the survey from, want a person to interact with them live, that they want their vendors and suppliers to be an in-person relationship. Specific to insurance, all of the decision makers were very specific about the engagement model needs to be more than once a year. You know, gone are the days where you just renew the business and you meet back again, you know, 12 months later. They want an engagement model that's far more frequent. They also want the people that they're dealing with to be in their geography. I really believe, and we've taken this to heart as a leadership team, that the best carriers, the ones that will succeed in the marketplace, are going to have to have national scale and have a local touch. We're seeing that close to half of the respondents really want to work with individuals who are located in their region and understand the local nuances of their jurisdiction. The United States is comprised of 50 different states. We know that. What's really unique to the insurance industry is each of those 50 states have a lot of regulatory environments that are not the same. Being local is really, really important to the buyers. We have sort of taken that to heart. I think the other statistic, financial stability, 70% of the customers want that. We felt that was really important, but it has extended far beyond just the ability to pay the claim. They want to know that the carrier that they are doing business with has the capital to make the investments in the things that really matter. Making sure you have the best claim department, the best tools in the claim department, making sure that you have risk control consultants that can be local, that have the best tools, investments in, you know, ergonomics capability, an industrial hygiene lab. They want a carrier that does not just pay the claim, but rather makes the investments in the entire experience becoming better. I think this one is really important. They want to do business with a company that understands their business. If you are a life sciences company and you're in the pharma business or the medical product liability business, they want to know that not only does their underwriter understand the nuance of the exposures that their company has, but they also want to know that in the event of a loss, they've got, you know, a dedicated claim professional who understands the nuances of the claim. Certainly, you have to surround all of that with risk control capability that's specific to a life sciences company. In the construction, energy, and marine space, particularly construction, you know, so much of our customers are on a job site. So much of the underwriting expertise that's necessary is to ensure that you've got the right contractual insurance obligations in place. This notion of contractual risk transfer, understanding that, that's especially important in that business. To be able to do a life sciences company and a construction company and not have differentiation at the underwriter level just wouldn't be successful. It feels as though that expectation is very, very high. Coming off of COVID, anytime you hire new customers, and there was an influx of that the last couple of years, all of the customers are looking for the ability to help with a new hire orientation. There's a causal relationship between when you hire new employees and injuries happening in the first 90 days. They want companies that are cutting edge relative to generative AI. You know, one of the examples that I always talk about is the ability to use AI in a risk control environment, just looking at an ergonomic workplace injury and using that tool to make sure that we can be not only effective in the prescription on how to avoid those losses, but also be in a position to do that very, very quickly. In the manufacturer space, you know, supply chain dependencies was another concern that has come up over the years. How do you deal with, you know, vulnerabilities if you've got a supply chain contingency that goes away and how to mitigate that risk, how to mitigate the risk of a single supplier. Anytime you have a change in operations that requires you to, say, store materials that you wouldn't otherwise store in your facility. All of the things that we see seem to be important to our customers as well, that you have to have underwriting, claim, and risk control that is specialized in all of these industries. Thank you, Scott, for that really, really comprehensive answer. Actually, one of the things that I recently, and you travel a lot, I certainly travel a lot, you know, just talking about the national scale of a carrier, but that local underwriting and understanding the nuances in these 50 states. I just thought, you know, recently I was in Nashville and Chicago. Today I'm sitting in our St. Louis office. I'll tell you, execution with excellence in the field is what we're good at. I've seen this just repeatedly every single office I visit and talking to the underwriters and understanding the local nature of what they write. Thank you for that. All of that just resonated with me. I want to move on to buying patterns. What insights did you uncover about middle market buying patterns and preferences of that buyer? Yeah, you know, anecdotally, we've seen a shift in buying patterns. There seems to be a growing interest in purchasing more lines from one carrier. The survey has supported that. We've got 63% of the respondents telling us that there would be a willingness to buy all lines from one carrier if the carrier has deep knowledge and expertise in that industry. I think that was a little bit higher than I expected, candidly. When I think about consumer buying patterns, you're seeing the same thing. A lot of folks are or we're all making decisions about buying in an ecosystem. We're buying more things from one place. You know, Amazon, probably a dated example, but nobody just goes to Amazon to buy books now. They buy a lot of stuff. The same thing seems to be trickling into this particular cohort of business and how they would buy. We've got another metric that says 62% say it's very important to have the ability to handle all of the insurance needs with one company. More than half of the respondents recognize that there are advantages to placing all of the insurance with the same carrier. You think about that within the context of, say, a manufacturer, as I mentioned before, they're going to buy Workers Comp, GL, and Auto, and Umbrella, and Property, maybe some manufacturing, E&O, Cyber, a global placement. They're going to buy all of these lines of insurance. When a claim happens, there is, you know, a lot more evidence to support that there's less confusion when the claim happens. You've got close to half of the folks understanding that placing multiple lines of insurance will allow them to just feel better about when that claim happens. I thought that was a fairly compelling statistic. It didn't surprise me that the strength of the percentage actually was higher than I would have expected. You know, candidly, our distributors, our agents, our brokers have done a fabulous job in doing this. When they work with their middle market customer, oftentimes their penetration into that customer is very high in terms of multi-lines. I've been envious of that. I think we're seeing a shift now where distributors are expecting that from carriers as well. There's an efficiency to that process. They understand the customer better, less confusion about claim. Very candidly, the diversification of premium that comes from selling multiple products allows a carrier to price it as a customer as opposed to a bunch of individual lines. I think there is an enormous benefit from being able to bring the entirety of all of your offerings to one customer and an equal amount of receptivity of those customers to buy that way. That has been intriguing to us. Okay, thank you for that. Scott, I want to talk about, I was just in San Diego at the RIMS Conference, the Risk World Conference last month. I spoke to a customer that I asked him, you know, who does he partner with to manage his insurance programs? You know, middle market, very solid middle market customer. I'm going to read a couple of things to you that he told me, and then I want to get your reaction. He says, as an organization, as his organization has grown from mid-size to a larger business, it's a stronger partnership with the carrier and the broker. Gets stronger because they rely on them more. They realize risk management, that's number one. Number two, they realize risk management needs to be its own function as a high-level position due to complexity, market conditions, expertise, and industry knowledge. Okay. Number three, with their growth into a much larger middle market customer, it can't be done well by just the controller, this risk management. It's not easy to find risk managers these days, which adds, of course, to the challenges. Again, that talent acquisition, retention, the whole industry is struggling with the talent piece. Fourth, he said, 20 years ago, renewal was an afterthought. Renewal may be 2% increase, one way or the other. Now, he told me, it's a 12-month process that requires investments in safety and property infrastructure. It's a whole different ballgame than when he was a smaller company. What does this all tell you? First, I'm glad they're a customer. That's great. I mean, a lot of what you just said there sort of validates what I said as well. Clearly, there's an element of trust or advisor steps there. You just have to have that. It sounds as though, you know, by naming somebody beyond a controller to deal with insurance, we have to wink in with that buyer from a distributor. I think that was very astute. Complexity, market conditions, expertise, industry knowledge, all of the things that we talked about, you simply don't want to make a purchasing decision that significant and not do it with somebody who's got a high degree of industry specialization and having a broker who understands market conditions. There's a great complexity to this business. I love the last comment. It's something about, you know, it used to be a one-and-done. You would take the increase and then you would come back, you know, 12 months later. That is absolutely not the process in the middle market space. There's a much higher level of engagement that's expected from our customers. It's sort of up the ante. I think to be successful, you're going to have to drive value through a 12-month process. What I think is most interesting goes back to what I'd said originally, of the $152 billion marketplace out there, the middle market buyer, 88% of them are buying guaranteed costs. They are paying premium to transfer all of the risk, yet they're having this much higher expectation on value. To me, that is, it just speaks to, you know, an understanding that the customer has that there's complexity here and that they do need to mitigate losses. They do want to be with the company that's innovative and can help them do that and understand their business. I loved all of that. I hope this is one of the people we surveyed. Yeah. I mean, it's really interesting just to hear about the thoughtfulness of the 12-month process and the risk control because they don't want to have to file a claim, right? You want to avoid that. The thoughtfulness all year long versus just about one renewal a month. It's really, I love going to RIMS, by the way. It's really, it's invigorating and it just shows how innovative you all are in your underwriting expertise. I want to talk about what's keeping people up at night. What is that middle market decision maker that you talk to? What's keeping that person up at night, Scott? Yeah, you know, the big thing, you know, cyber risk and then attracting and retaining talent, two sort of different things, but seem to be the things that they're thinking about. Relative to cyber or computer-related technology, cloud, any of those things, I sort of emphatically agree with that worry. I mean, cyber is a top concern in the news. It is a very important insurance coverage. It is still a relatively new insurance coverage. I encourage, you know, all of our customers to understand, assess their exposure, sit down with their agent, broker, and carrier and have a really thoughtful conversation about what your exposure is and how you mitigate that exposure through buying the coverage. You've done a really good job in your webinar series. I know you've profiled some of the many experts we have here on cyber and taken advantage of that great expertise. I do think that's a very big worry. You don't have to watch the news too long to realize that it's a significant deal, not just in the commercial space, but also in the consumer space. I'm, you know, equally not surprised about the notion of needing to attract and retain talent. I mean, this feels like an industry that is light on talent right now. There needs to be a bit of an investment there. You know, if you were to ask about the challenges on talent, I tell you, we think about it a lot. You know that. We talk all the time. 2/3 of our customers worry about that. I hear it from brokers and I hear it from customers. We're living it here at Travelers as well. I think the big thing here is as the next generation enters the workforce, I've been amazed at their capacity to learn. We have a very significant sort of new-to-industry training program that we do across multiple aspects, whether it's actuarial, underwriting, claim, operations, finance. Their capacity to learn is significant. They also learn much differently than I was used to. Now it's digital. It's self-paced. It needs to be on demand. Some of our negotiation curriculum includes gamification, where you're in sort of a gaming-type environment. Like I said, the ability to sort of absorb information seems to be incredibly high for people joining us. There seems to be a high emphasis on accelerating their careers. I mean, the impact of social media has done that. The development of their personal brand, we've tried to do that as well and talk about the fact that we're going to socialize or influence amongst a lot of different leaders at Travelers. We think we get great people into our organization. We work very hard to make sure the learning matches with their expectations. We make an investment in their personal brand. I think that that will be really, really important for any company to sort of attract and retain the top talent. Yeah, I've really been amazed at our Leadership Development Program. So the LDP program, as you say, the different disciplines of actuary, underwriting, claim, finance here. It's a really fantastic 3-4 year program, depending on what discipline. We've graduated some amazing LDP folks. I've had a number that work for me. I know you have a number that work for you. You really just get the cream of the crop coming to Travelers to be in those LDP programs. If anyone out there wants to apply for our LDP programs, they're throughout the year. They're different staggered. Do check out our career website. I know that our training programs are top-notch. I think, too, we're, you know, it's a difficult industry to attract. That is why we partner with all of our risk management university and college folks, like the University of South Carolina or St. John's or others in this space, UT, University of Texas, Denton has a big program. We at the Travelers Institute, Scott, have taken our kind of our roadshow with our recruiting folks to talk about how we can get more young people in our industry. We are doubling down on that for sure. On the cyber piece, just to remind folks, we do have a very large cyber in-person symposium program over the last eight years. We have done about 50-plus programs with our agent and broker partners, educating, talking about what is necessary from the Department of Homeland Security, the Federal Bureau of Investigation, the U.S. Secret Service. We partner with all those government agencies to raise awareness. In fact, Alan Schnitzer, our CEO, is the only CEO in the insurance industry in the national carrier space to be invited by President Biden to the White House to that cyber summit about two years ago, which was a really important acknowledgment, I think, by the government and others that the insurance industry has a real big role to play to help our middle market partners get cyber hygiene clean. On those two fronts, cyber and certainly talent acquisition and retention, we're in the game. It's very exciting. All right, I want to move on, Scott, because we only have so much time here. We want to get audience questions too. I want to talk about customer expectations and technology, specifically when it comes to Travelers. You mentioned how insurance is a trusted advisor business today, going to price terms, conditions. Talk more about what Travelers specifically is doing when it comes to customer experience and technology. Yeah, you know, part of being financially stable is the ability to regularly evaluate new technologies, have the capital to give consideration to all of the things that, you know, are out there. You know, the last time we spoke, we talked about insurtech. That's still incredibly relevant. As of today, I mean, the hot item here is artificial intelligence. You mentioned Alan before. Alan has made that a priority in our company to think about how can this, you know, help our business. We have aligned leadership around the use of generative AI. I would think about that as accelerating transform initiatives that allow us to extend the advantage that we have in our core competencies. It could be things that I'm very passionate about. There is a lot of friction and time in the transaction process. Brokers send us the same degree of information every year, even if it's a renewal. There are so many things that we think a generative AI solution can take and improve that. Sometimes I think about AI as sort of being, you know, how can that help an underwriter or a claim professional really focus on value-oriented activities? Every job has some component of work that, quite frankly, isn't, you know, terribly hard to get done, but they just have to do it. We are thinking about AI as just making the life of an underwriter a little bit easier, supplementing information, going out, grabbing that information, not putting that burden back on the distributor. Anything that can drive a faster insight into our decision-making, whether it's at the individual risk level or at a large portfolio of business, there's clearly application in the AI space for that. We think, obviously, if you can use some of this, it can support a competitive price structure. I certainly see AI, and we're going to use this in our space, to accelerate the learning curve. I've talked about retaining and attracting talent. I feel like the industry is light on talent. We're hiring a lot of people. You know, the expectation to accelerate the learning curve, we think, can be supported in a generative AI environment. You know, one of the other things that, you know, I'm interested in is, and you know this, we've got a dedicated group here that thinks about nothing other than innovation. It is becoming increasingly clear that customers expect that same dynamic. We have an innovation network, and we are starting it out. It is curating a collection of technology solutions that help customers manage risk. One of the things that we are seeing in very specific industries is that our customers are looking for help on, you know, what device would be the best company to partner with? You know, what wearable to control my workers compensation would be the best company to work with? It feels like there's an expectation level that this trusted advisor concept that I keep talking about has extended itself beyond price terms and conditions and risk control and claim service, but almost to the point of being consultative and saying, "Hey, we think this would be a good offering for you to consider if you were going to get into the telematics space or the wearables." We have partnered with some companies that we have confidence in, and we share that confidence, you know, with our customers. We have three different networks now, one dedicated exclusively to construction, one exclusively to energy, and one to our Northland customers, which is our trucking operation. There will be more to follow. To me, it's another example of how we're making the investment in technology and innovation to make sure our customers are getting the answers that they need. Let's talk about the digital experience, right? Because it feels to me like we are differentiated from other carriers out there with regard to our Travelers digital experience for those stakeholders. Can you talk about that for a second? Yeah, we talked about it the last time. I'm pleased to say that we've made a lot of progress. We feel like digitizing the value chain is critically important. It's important we handle, you know, we work with 10,000-plus agents and brokers and how we exchange information. We feel like there's an easier way to do that. The one example I think I shared with you last time, and I can say, you know, with a certain sense of pride, that we do believe we were the first to offer agents and brokers a comprehensive portfolio loss data exchange, which would allow us to digitally transfer to a middle market distributor's loss information on the entire book with us. You know, Alan went public with that, I think, at our last earnings calls in his script. We think that the exchange of information between distributor and carrier needs to be improved. You know, we put a high bar on ourselves to make sure that we are the most ready to do that when it's time to do that. We have been excited about the progress that we've made there. Great. Thank you for that, Scott. Let's talk about just some other investments. Real quick, maybe go through what other investments Travelers is making for those middle market customers then? Renewable energy, solar and wind, that industry is moving. We are positioning underwriting and the corresponding specialization necessary in claim and risk control to make sure that we are in that space. Private equity is a business that we have always done. Think companies that are owned by private equity companies. That buying pattern has sort of taken hold. There is an expectation level that you need to service that a little bit differently. We have announced a private equity practice for ourselves, which has been exciting. We are off to a great start there. Advanced manufacturing is sort of the next subset of manufacturing that is going on. We are using technologies in the process to improve. We have a lot of customers in that space. We have a dedicated industry-edge offering for that. Just, you know, responding to what's going on in the marketplace relative to changes and making sure that we're current with it. But those are three exciting things that I've been sharing. Okay, great. I'd be remiss if we didn't talk and ask you about your perspective on the actual marketplace. We actually have a number of questions coming in through the Q&A here from our audience members on this question. Tell us about what you're seeing in the middle market today. How do you feel about marketplace inflation, right? Inflation is a big critical topic for all of us. Any other critical factors that you're seeing today? You know, what's keeping you up at night, maybe? Yeah, the things that keep me up at night are the things that we pay really, really careful attention in terms of how we price the product. There's a couple of you mentioned already. You know, we pay attention to the economy. Obviously, I think insurance is a strong economic indicator. It's critical to the success, you know, in commerce in general. Inflation is a big deal. Looking at the labor market, we're paying attention to that. The implications for us could be very real there. We talk about social inflation. There's economic inflation. I talk about social inflation, which, you know, we're starting to use language like legal system abuse. There is a very active plaintiff bar. We're seeing verdicts that can be fairly significant. We offer a lot of liability coverage. We insure a lot of industries in a very litigious country. Legal system abuse is one. The weather, you know, the weather patterns have changed dramatically. 2023 was the most costly year on record for, you know, what we call severe convective storms. Think tornado, hail. You know, that's always occurred, but it used to occur in a certain place. Now it occurs in a lot of places. Volatility of weather is a big deal. Workers' Comp, we are a very large writer of workers' compensation. It's critical to pay attention to medical cost inflation there, medical trends. We do that. We have to have a lens into the reinsurance community. We are a reinsurance buyer. We're not overly beholden to it because we consider ourselves very good underwriters with a lot of capital, a lot of capacity. Pricing starts with how reinsurers feel and their results. We're dealing with some of those pressures. Those are some of the things that we're thinking about each and every day. We've committed a lot of resources to do that. Okay. That's a lot. Lots to juggle, lots to worry about. I want to talk about the different lines of business because you mentioned a few earlier, but are there any challenges then for the middle market decision maker, the buyer, when it comes to specific lines of business that we sell? Yeah, that's a great question. I mean, if you're a broker or you're a buyer and you're thinking about auto, three things. The first ones are pretty easy. I mean, inflation, vehicle prices are up, repair costs, labor, it just costs more. The second thing is, again, probably you're very aware of driver behavior, distracted driving, drowsy driving, impaired driving. That's happening, unfortunately. Those two drive loss costs. There's no question that that is driving an increase. The third one, you may know about, but you may not know the magnitude of it. That is the notion that attorney representation as a percentage of every commercial claim that comes in continues to get very, very high. When you have an attorney involved in a claim and it goes to suit, it is multiples of cost. Those three things, I would tell you candidly, will continue to drive price in the auto line. The industry combined ratio for that line, it's not unique to us or anybody else, but it is high. It is going to need some pricing. GL and umbrella, I talked about legal system abuse. I talked about courts working through the backlog. There could be some claim development there. You know, we look at our competitors' results, and they've had some prior year development in the recent quarters, adding or strengthening their reserves for GL and umbrella, paying attention to that. Property, I talked about. I feel like the property market is more organized now than it was a year or two ago, meaning everybody's got their reinsurance in place. There is some, you know, degree of ROE, positive ROE associated with the line. That will trigger. No sooner do I say it's organized that the volatility of the weather continues to evidence itself. That's a line of insurance where I would expect you would still see some really responsible underwriting in that line. Workers' comp, as I said before, you know, the frequency has been favorable. We pay attention to medical severity. If there's a discernible change in medical pricing, medical inflation, then that would certainly impact us. In all, I see a necessity for underwriters to be responsible across, you know, the big five lines of insurance. That's what I expect you to see for the rest of the year and certainly into next year. Okay. All right. That's very, very helpful. We have some questions coming about, you know, is the middle market growing? Should we expect exponential growth? Is it on a slower path, but do you see evidence of the middle market growing? Yeah, yeah. I think I opened with that. I think with the compounded growth rate for the next couple of years, about 7%. It is pretty meaningful. You're talking about 300,000 customers. I do not want to under, you know, $152 billion marketplace of available premium in the United States. That is a big cohort of business, and it is growing. Yeah. You know, so many things have changed, you know, kind of since COVID. The labor market has changed. Lots of things going on in the world. What, you know, maybe in the last 10 years, Scott, what sticks out to you in terms of the industry changing in the last 10 years? I mean, I still think it's a trusted advisor business. You know, at its core, it's a customer, an agent, and an underwriter figuring out what the best program is. I don't think that's changed. I do think this notion of value and the expectations for service and product and value and innovation, you know, there seems to be a renaissance period we're in right now where there's so much of that going on. It's really being driven by insurtechs, you know, people looking at the industry from the outside. Is there a better way to do it? I think we pay attention to a lot of that. It's an influx of data and technology into an industry and using those things to create or drive a more efficient process. Very much still a people business, but also being influenced heavily by just technology availability and companies in the insurtech space that were not there 10 years ago that are there now that are helping carriers think through things. It goes back to what I said before. Being financially stable allows you to not just pay your claims, but allows you to make the appropriate investments if they need to be done to better your business. I think that will be critical for carriers in this space. Okay, good. Scott, we're going to wrap up, and we're going to go to audience questions. We have a ton coming in. I want to get to as many as we can. What do you want people to take away from this conversation today? We've talked now for 45 minutes or so, and, you know, we covered the waterfront, and we, you know, we're kind of an inch deep and a mile wide on all the things happening in middle market. What are those kind of key takeaways you want people to understand from this conversation? Yeah, you know, just the customers do not make a change for the sake of change. You know, it feels like the expectation level for a customer in this space is much higher than it has ever been. I have been in the industry for a while, and, you know, price played a much, much bigger role before. It is the numbers I shared with you before: 55% go to market for price, but only 6% make the decision on price. That speaks to, you know, a cohort of buyers that are much more value-driven than they are price-driven. You know, our leadership team reacted to this by saying the same things. Customers are not going to make a change for the sake of change. They are going to make a change because there is something compelling with a carrier that they want to take advantage of. I think that's probably not news to any of the distributors that we're with or customers that may be listening in. You really have to, you have to raise the bar relative to what you can offer. Yeah. No, that's great. Okay, some audience questions. Here they go. Daniel Lathrop of Lathrop Insurance. Are there solutions for fleet auto that can actually reduce risk over time? That's a great question. You know, I don't like the answer, but, you know, fleet auto or a heavy fleet auto right now is certainly attracting some price change. I mean, there's some rate dynamics with that. I suspect Daniel's question is predicated on price, but, you know, sort of astutely observing what can we do beyond price. I think, again, relative to technology, the utilization of this will be really important. Vehicles equipped with advanced driving systems. Think about in the consumer space, if you've got a new car, you've got things like forward collision warnings. You've got, you know, emergency braking. You get a little light if you're about to leave the lane or it keeps you in the lane. Those technologies are available for big fleets. Now, there's certainly a cost associated with buying a bunch of new vehicles, but we think that would have, you know, a significant impact in reducing risk over time. Telematics. And what I mean by telematics, but it really needs the proper usage of it. A lot of big fleets probably have telematics. They're using it for logistic purposes. If you use telematics and actively monitor the driver behavior and actively commission somebody to look at it and provide the feedback, and candidly, if it's not working out, they're not doing it the right way, then you've got to take action. You know, we're intrigued by electronic logging devices. I think they've been around five years now for all fleets. It really is a mechanism to limit the hours. I'm simplifying, but limit the hours that a truck driver can drive. Those logs can be incredibly beneficial if we sort of play by the rules here. I think there are things that have taken place through the use of technology that I think can have an impact. There are a lot of good drivers out there. The best drivers for a fleet are going to want the best vehicles. There is going to be some cost associated, I think, with driving the best vehicles. At the end of the day, I waited till the end here. Price is still going to play a role in auto space. There is just too much, there is too much inflation, vehicle parts, labor, attorney involvement, and there just has not been a return for the industry. I suspect price will still play a role there. Okay. Another couple of questions coming in. Just staying on this topic of auto and fleet, do you see autonomous 18-wheelers in the near future? We know autonomous cars, obviously, we thought we'd be further along in autonomy now. What about fleet vehicles and autonomous, I forget what they call them when they all line up. There are two or three behind each other. I forget the name of that. Do you see autonomous 18-wheelers in the near future or five years, 10 years down the road? Yeah, I don't see it in the near future. I certainly think the technology will get there, and it will be a part of our life. I don't think it'll be in the near future for some of the reasons that I said before. I mean, there's going to be a cost associated with making that happen. I suspect we probably have somebody in the company that's got some forecasting as to when you would get X percentage of autonomous vehicles in a fleet basis on roads across the U.S. I don't see that being anytime soon, but you could certainly fact-check it. We've got a bunch of people around here thinking about that. Thinking about it. Yes, we do. We certainly do. Okay. Another question coming in from Greg Knapik of Risk Strategies in Texas. Putting premium aside, what are the top five items most important to middle market decision makers today? Yeah, I think we went through a lot of these. A great question. Certainly industry specialization. It's, I've said this a couple of times, increasingly clear that the buyer wants to engage with a carrier that understands their business. And so that means underwriting, risk control, claim, etc. Gone are the days where you're just a generalist underwriter. So specialization, it definitely feels like in-person engagement. The person you spoke to at RIMS, for example, it's not one and done. It's something that happens in the course of 12 months. Stewardship, making sure we're responsive. So in-person engagement, certainly the trusted advisor concept is important. I think they want a company that's making or knows is investing in innovative products. Anything that can help guide the way. Should I buy this telematics device? Should I buy this wearable? You know, is the company setting up an innovation network for me to give consideration to? It's all around, it's all around value. If you don't have it, I think it's going to be, it's not going to work out. Okay. Another question coming in from Franklin Manchester. Scott, how do you feel about the state of the market's readiness and understanding for the safe use of AI? And Franklin is from the SAS Institute. Talk about AI and, you know, all the guardrails and the things. We have a huge amount of people, obviously, and Travelers working on this, as do all the carriers. You know, how do you think about AI use cases going forward? There's a lot of potential here, but he's asking about the safe use of it. Yeah, and I think it's a great question. I'm not sure I'm entirely equipped to answer it. There are people in this company that are, and this might be a webinar for you in the future, Joan, because we do talk about it. I can tell you from our vantage point, the governance that we have around AI, the usage of our employees to use it is decisioned at the very highest level of the organization through our Chief Information Officer and all the way to Alan's table. I don't know if I can speak real fluently on what we have in place there. I can tell you that the pilots that we have or that we're working on are really involved in the efficiency play, finding tasks that we think could be AI-generated in support of an underwriter or a claim professional, or certainly what I said earlier about creating a better learning environment for folks. I wish I had a better answer there, but I think we can follow up with that one, certainly. The point is we're very thoughtful about it, right? I mean, we are not rushing into this, just like we don't with anything else. We're testing, learning. We have a lot of people kind of very focused on it right now. We just opened a new tech office. Did we not in Atlanta? In Atlanta. That was a big deal. I think, to your point, yes, we got all the right people, but Alan's really made it a priority for us. It's not, and very smartly doesn't make it just the purview of our IT folks, but rather brings the entirety of that thought process into the leaders across all functions in the organization. Again, very top of mind for all of us. Yeah. Okay, great. Another question from Cole Adams. Can you talk about the differences of some of the middle market divisions you run, specifically CAG, middle market construction, middle market construction? What is the difference between middle market and middle market construction? Yeah, I mean, yeah, think about middle market being sort of a, you know, a holding company. One big segment that we have is called Commercial Accounts Group. I would think about that as all things in all industries but for construction. In that space, Commercial Accounts has manufacturing, retail, real estate, educational institutions, auto dealers, 24-25 different industry segments. Also included in that group is our technology, life sciences space, our public sector business, and our standalone umbrella business as well. We also have another division within middle market called Construction Energy Marine. It's exactly how it sounds. It is construction contractors. It is our energy contractors, whether they be solar, wind, or oil and gas. Then our two marine businesses, inland marine as well as ocean marine. That is another subset. We have a national property space, large property monoline. We have an entity that deals with that. We also do boiler both on a direct and a reinsurance basis. In its entirety, middle market is comprised of 11 different business units, some as big as $6 billion or $7 billion commercial accounts, all the way to a very specialized organization like ocean marine, for example. In total, about $14 billion. The middle market monikers, it really denotes the definition that I shared with you early, about 50 employees to about 1,000 employees is sort of how we operate in that space. Okay, great. Another question coming in from John Barron about, you touched on the alternative energy space with wind and solar. How do you see those marketplaces developing? Are they a growing field? Is solar specifically growing faster maybe than wind? How about offshore wind? How do you think about offshore versus onshore wind? We're in the wind space more so onshore than we are offshore. As soon as I say that, I want to recognize that we do offer in the energy space, particularly wind and solar out of our Lloyd's syndicate as well. We are in the space from a Lloyd's sort of subscription basis as well as domestic admitted in the U.S. I can't speak to which one is growing faster in terms of in the aggregate, but I can tell you that we're quite active in wind and in solar. We recently had an energy summit on this because this is another very important consideration that we're giving that we think we need to pay attention to. There is going to be an influx in charging stations that are being built. There is going to be an influx of wind. There is going to be an influx of solar. We want to make sure that there's readiness to that. Included in the middle market actually is our, you know, energy space. We've got dedicated leadership and dedicated claim associated with that. It's an exciting growing business for us. Yeah, no, that's great. You know, seeing around corners in terms of what the federal government did and how much money they put into building these charging systems across the country and the opportunities there for insuring all of those things. Scott, this has been an amazing conversation. I want to thank you so very much. Again, I know you don't come on a lot of these programs and speak publicly about our business. It's so valuable just to get your personal perspective given all the many years of you in the business. I have one more question coming in from the audience. I think this could be the most difficult for you. Of all the years of playing with pros and the celebrity pro am, what was the number one piece of advice that you could share with our listeners today about maybe what a pro had given you a tip along the way, whether it's chipping, putting, holding your head down, watching the ball, not paying attention to the fans? What is, give us a piece of advice for our golf team. I'm not sure I ever asked for playing advice, not because I didn't need it, but because I didn't know if I could actually understand what it is they were saying. I have had one of the things that the advice that I've always given people who play for the first time is get to know the caddie. I think the caddie for the pro is a fantastic resource to get a sense for how things are going to flow. My experience with everybody who's come, every professional that I've had the opportunity to play with for the pro am, is they've been extraordinarily generous with their time. You know, if your nieces are running along the rope line and they want a picture with the pro, they come over. I think that's them. I also think it's the environment that we've created at Travelers. This is sort of a hometown event. The most important advice that I think they've given me is they've seen every bad shot that every person can do. Relax, just have fun. If you think everybody's watching you, they're not. If you can get over those, then you know you'll be okay. Sounds like a good time. Scott, thank you so much. It's been really a joy to have you on the program. I appreciate your time. We're going to talk about some other exciting webinars coming up. Thank you, Scott. Thank you, Joan. All right. Today we have a link to our survey about today's program in the chat. Please fill it out. Please let us know what you'd like to see going forward on our programming. If you're a podcast person, please add ours to your playlist. The Travelers Institute Risk and Resilience Podcast is now available on Apple, Spotify. Subscribe today. We're going to throw that link in the chat so it's easy for you guys to subscribe. I hope you'll join us for the next coming. We have a summer series coming up here on July 17th. Veteran diplomat Dr. Richard Haass is going to join us to talk about geopolitical risk around the world. He's worked for seven presidents, both Democrat and Republican. He's a wealth of knowledge about geopolitical risk. On July 24th, we're going to be at the Insurance Institute for Business & Home Safety in South Carolina. We're going to do a behind-the-scenes look at how they test for all these weather perils: wildfire, hail, wind, wind-driven rain. Join us live for that. Last but not least, as I said, I'm in St. Louis tomorrow on our National Security Education Tour. If you're there, please meet me in St. Louis. 1944 Judy Garland movie reference intended. Registration is still open. We have a few seats left. We're dropping that link in the chat for tomorrow's event here. As always, visit us at travelersinstitute.org for replays and information. Have a great afternoon, everyone. Thanks again for all your support over these many years.