2006 National Auto Insurance StudySM Presented to: St. Paul Travelers November 1, 2006

Today’s Program Presenters Jeff Leiman Senior Research Director, Insurance Practice Chip Lackey Senior Account Director, Insurance Practice Agenda Overview and Key Findings Financial Value of Satisfaction Overall Satisfaction Performance Satisfaction vs. Key Competitors Detailed Findings Closing Remarks and Recommendations

J.D. Power and Associates - Introduction 35+ years of measuring customer attitudes, behaviors, perceptions, needs…. Recognized as having transformed industries through measuring and reporting customer satisfaction Industries we serve have requested that we bring the pieces together into a comprehensive, unified and actionable plan Gary

The Customer Experience Model The 5 P’s of the customer experience People Presentation Price Product Process Gary First we must understand that each company creates a unique customer experience through a set of five inter-related aspects of their business systems (business and operational models)

Index Framework

Customer Satisfaction Varies by Industry Experiences from one Industry influence customer expectations for other industries Gary

Key Findings

Key Findings Travelers ranks 12th in customer satisfaction with an overall CSI score of 790, ten points below the industry average. Within its competitive set, Travelers outperforms Progressive and is comparable to Allstate, The Hartford, and Safeco. It trails both GEICO and State Farm in satisfaction by a significant margin. However, Travelers is among four insurers—three of whom utilize Independent agents—who enjoy an improved satisfaction level compared to 2005. Satisfaction with the Interaction experience has grown significantly for Travelers since 2004, moving from a competitive weakness to average performance in 2006. The improved performance of its independent agents drives most of this increase. Compared to its key competitors, Travelers is relatively weak on three of the five factors that comprise the customer experience: Billing and Payment – Statements need more clarity, many customers confused Claims – Due to lack of agent involvement and slower than average servicing Policy offerings - Poor scores for variety of coverage options and available discounts

Financial Value of Customer Satisfaction

Overall CSI vs. Likelihood to Renew

Auto Insurance Customer Satisfaction Financial Measures High satisfaction carriers enjoy an advantage across all of these measurements.

Overall Satisfaction Performance

Customer Satisfaction Index Models

Customer Satisfaction Index Model - Combined

Overall Customer Satisfaction Index (CSI) Ranking Difference from 2005 ‡ USAA is not ranked because it is not generally open for the public to purchase. Significantly better than 2005 at a 90% confidence interval, based on nationally weighted data. Significantly worse than 2005 at a 90% confidence interval, based on nationally weighted data.

Overall CSI Index Trend Improved satisfaction in 2006, though Travelers trails competitors Key Competitors: GEICO, Progressive, SafeCo, Hartford, State Farm, Allstate.

Satisfaction Performance vs. Key Competitors

St. Paul Travelers vs. Industry Gap Point Analysis

St. Paul Travelers vs. GEICO Gap Point Analysis

St. Paul Travelers vs. Progressive Gap Point Analysis

St. Paul Travelers vs. State Farm Gap Point Analysis

St. Paul Travelers vs. SafeCo Gap Point Analysis

St. Paul Travelers vs. The Hartford Gap Point Analysis

St. Paul Travelers vs. Allstate Gap Point Analysis

Key Performance Indicators for setting Improvement Targets

Example: Issue Resolution KPI Example: Issue Resolution KPI** Performance - Number of Contacts to Resolve Issue Breakpoint % of Customers Contacting Insurer Overall Interaction Index **Key Performance Indicator # of Contacts Made to Insurer

Key Performance Indicators Focusing on these issues should improve satisfaction The study identified the following Key Performance Indicators that lead to a more satisfying consumer experience: Bundle auto insurance coverage with a other products Offer policy discounts If a premium increases, notify the customer prior to the bill and discuss coverage options Minimize billing related contacts of any type Encourage online or automatic payments Adopt an “once and done” mindset that empowers agents and representatives to handle customer questions/problems on one call. If a customer requires a re-contact, strive for same day resolution Offer customers a policy review on an annual basis For claims interaction, respond to the FNOL within one day and include the agent in the process. For the claims settlement, settle vehicle damage claims within two weeks and provide claimants with a detailed settlement explanation.

Key Performance Indicator Forecasting Tool

Improvement Monitoring Tool Web-based reporting of key metrics over time to the field

Policy Offering

Policy Offerings Index Trend Though improving, still a competitive weakness for Travelers Key Competitors: GEICO, Progressive, SafeCo, Hartford, State Farm, Allstate.

Discounts Rating (Industry) Discounts Received Discounts yield higher satisfaction levels 7.75 6.76 5.67 Competitiveness of Discounts Rating (Industry) Breakpoint

Policy Offerings Index Bundling and Customer Satisfaction Travelers customers bundle…but impact on satisfaction minimal Breakpoint % of Total Customers Policy Offerings Index

Products Purchased From Current Insurer Industry Overall Penetration Industry Average 785 3% 4% 13% 14% 18% 8% 12% 7% 5% 64% 23%

Policy Offering Attributes

Price

Price Index Trend Travelers improved, comparable to competitors Key Competitors: GEICO, Progressive, SafeCo, Hartford, State Farm, Allstate.

Price Sensitivity by Insurer Travelers price sensitivity comparable to Direct competitors Note: Values may not total 100% due to rounding.

Influence of Price on Purchase Decision Direct competitors most price focused…Agent least Note: Values may not total 100% due to rounding.

Premium Change and Discussion KPI** Performance Breakpoint % of Total Customers Index Scores Premium Change in the Last 12 Mths **Key Performance Indicator

Billing and Payment

Billing and Payment Index Trend Travelers trails competitors Key Competitors: GEICO, Progressive, SafeCo, Hartford, State Farm, Allstate.

Customer Satisfaction with Billing Contacts Industry Overall Index Score % Of Total Customers 87% 9% 3% 1%

Drivers of Satisfaction for Billing Contacts Industry Overall Attribute Rating Note: Base equals total customers.

Incidence of Billing Contacts

Customer Satisfaction with the Method of Payment % Using Payment Method Billing Index Score Note: The incidence of “payroll deduction” is less than 1% and is not shown. Values may not total 100% due to rounding.

Billing and Payment Attributes

Interaction

Interaction Index Trend Travelers and other IA insurers improve in 2006 Key Competitors: GEICO, Progressive, SafeCo, Hartford, State Farm, Allstate.

Interaction Methods – By Distribution Channel

Method of Contact and Satisfaction- Agent Distribution Industry Overall % Using Interaction Method Overall Interaction Index

Method of Contact and Satisfaction- Direct Distribution Industry Overall % Using Interaction Method Overall Interaction Index

Customer Satisfaction by Agent Type Industry Overall

Interaction Index Weights by Distribution Channel Industry Overall

Problem Mitigation KPI Problem Mitigation KPI** Nature of Most Recent Non-Claim Related Interaction % of Customers Contacting Insurer Overall Interaction Index **Key Performance Indicator

Reason for Contacting and Impact on Satisfaction Industry Overall Overall Interaction Index All Contacts 839 837 848 791 823 798 845 821 Reason for Most Recent Contact

Type of Questions or Problems Experienced Travelers customers have similar questions/concerns Index Score Industry Interaction Index 791 823 836 843

Problem Contacts and Impact on Satisfaction Industry Overall Overall Interaction Index Problems 676* 712 766 739 705* # 675* 685* Reason for Most Recent Contact *Caution: small sample size # Insufficient sample size

Issue Resolution KPI** Performance Number of Contacts to Resolve Issue Breakpoint % of Customers Contacting Insurer Overall Interaction Index **Key Performance Indicator # of Contacts Made to Insurer

Issue Resolution KPI** Performance Time to Resolve Breakpoint % of Customers Contacting Insurer Overall Interaction Index **Key Performance Indicator # of Days to Resolve Issue

Issue Resolution KPI** Performance Call Back Fulfillment Breakpoint % of Customers Contacting Insurer Overall Interaction Index **Key Performance Indicator

Overall Interaction Index Recency of Last Contact and the Impact on Satisfaction with Interaction % Contacting Insurer Overall Interaction Index N/A Timeframe of Last Contact

KPI** Performance Policy Review Breakpoint % of Total Respondents Index Scores **Key Performance Indicator

Claims

Claims Index Trend The claims process continues to be a competitive weakness Key Competitors: GEICO, Progressive, SafeCo, Hartford, State Farm, Allstate.

Most Recent Claim Filed With St. Paul Travelers Within Last 12 Months 13-36 Months Ago 805 808 Industry Overall CSI Index Scores More Than 36 Months Ago 826 Never 787 Labels of values less than 5% have been removed.

Type of Most Recent Claim % of Claimants Overall Claims Index

Claims Servicing FNOL and Primary Servicing Contact Vehicle Damage Claims % of Claimants Overall Claims Index *Caution: Small sample size Among Agent-Distribution collision, total loss and non-collision vehicle damage claims, while excluding bodily injury claims

Impact of Response Time and Claims Satisfaction Vehicle Damage Claims Breakpoint % of Claimants Overall Claims Index Among collision, total loss and non-collision vehicle damage claims, while excluding bodily injury claims Percentages may not equal 100% due to exclusion of "Don't know" and "Never" responses.

Impact of Call Back and Claims Satisfaction Vehicle Damage Claims Breakpoint % of Claimants Overall Claims Index Among collision, total loss and non-collision vehicle damage claims, while excluding bodily injury claims Percentages may not equal 100% due to exclusion of "Don't know" and "Never" responses. * Caution: Small Sample Size

Total Cycle Time – Vehicle Damage Claims Among Agent-Distribution collision, total loss and non-collision vehicle damage claims, while excluding bodily injury claims *Caution: Small sample size

Relationship Between Settlement Time and Settlement Satisfaction Vehicle Damage Claims Breakpoint % of Claimants Index Scores *Caution: Small sample size Among collision, total loss and non-collision vehicle damage claims, while excluding bodily injury claims Percentages have been re-based to exclude of "Don't know", "Claim still under review" and "Claim denied" responses.

Impact of Vehicle Repair/Delivery Time on Claims Satisfaction Overall Claims Index % of Claimants Repaired Vehicle Damage Breakpoint Repair/Delivery Time Among collision, total loss and non-collision vehicle damage claims, while excluding bodily injury claims Percentages may not equal 100% due to exclusion of "Don't know" and "Never" responses. *Caution: Small sample size.

Received a Settlement Explanation All Claim Types Breakpoint % of Claimants Overall Claims Index

Direct Repair Facility Usage Repaired Vehicle Damage Claims Breakpoint % of Claimants Overall Claims Index Among collision and non-collision vehicle damage claims that were repaired, while excluding bodily injury claims *Caution small sample size

Shopping

Serial Shoppers, Recent Shoppers and Non-Recent Shoppers % of Shoppers Overall CSI 1 2 3 1”Serial Shoppers” shopped in the past 12 months and intended on shopping again 2”Recent Shoppers” shopped in the past 12 months but do not intend on shopping again 3”Non-Recent Shoppers” shopped more than 12 months ago

Past Shopping Behavior vs. Future Intent to Shop

Switching Behavior by Primary Reason for Shopping Industry Overall *Caution: small sample size 1Among those that shopped in the past 12 months

Life Events Industry Overall Shopped-Switched Shopped-Did Not Switch Did Not Shop Among those that shopped in past 12 months

Rate of Switching by Quote Method Industry Overall Among those that shopped in past 12 months

Factors Influencing Purchase Decision Industry Overall Among those that shopped and switched in the past 12 months

Leading Reasons for Shopping Travelers customers shop for same reasons as others

Leading Reasons for Selecting Insurer Travelers less likely to select based on service, recommendation

Recommendations

Recommendations Examine the benefits to customers of bundling, as Travelers does not enjoy the lift it should in satisfaction. Also work to gain a greater “share of garage” through more multiple vehicle policies. Continue efforts to empower independent agents to deliver world class service to Travelers customers. Encourage agents and service representatives to resolve customer problems and concerns the same day registered Encourage greater participation of agents in the claims process Strive to minimize billing confusion by educating customers on the process at the time of the enrollment. Continue work to improve the accuracy and clarity of billing statements. Independent-agent carriers lag the industry in billing satisfaction. Focus improvements efforts on the Key Performance Indicators outlined in the study. In particular target the following low performing variables: Notify customers of premium increases and discuss coverage options Work to contact more claimants the same day as the FNOL and tighten claim cycle time Consider greater utilization of direct repair facilities