When an executive from S&P Global Ratings asked how current global challenges like trade tensions, inflationary pressures, and geopolitical instability were influencing Travelers’ strategy, CEO Alan Schnitzer offered a response that may have caught Larry Wilkinson off guard.

“Honestly, not much,” replied Schnitzer, who serves as Chairman and CEO of The Travelers Companies, during one of the first sessions at the 41st Annual Insurance Conference hosted by S&P Global Ratings in early June.

Wilkinson—S&P’s Head of U.S. Property/Casualty Insurance—posed the question after Neil Stein, the agency’s Managing Director and P/C Sector Lead, flagged these issues as key concerns. While Schnitzer later acknowledged that social inflation and the broader economic effects of geopolitical risks are present-day hurdles, he emphasized that these challenges don’t shake the company’s foundational strategy. “You can’t pivot an insurance business overnight—and certainly not smoothly,” he said.

Running an insurance firm, he added, requires a constant forward-looking approach. “A certain level of uncertainty is always part of our reality,” he explained, reinforcing that the types of risks S&P raised are ones that Travelers regularly evaluates.

He reflected on internal discussions he and the company’s CFO held during the early stages of the COVID-19 crisis. “We spent two weeks on the phone asking ourselves, ‘What’s the worst-case scenario for Travelers?’” Schnitzer recalled. After stress-testing every part of their operations, “we honestly couldn’t find one.”

At that time, many distribution partners were facing serious liquidity issues. Yet Travelers’ confidence in its balance sheet, liquidity, and business model allowed it to advance over $100 million in commissions to partners, he shared. “Being prepared for uncertainty is simply how we operate.”

Rethinking Catastrophe Risk

Schnitzer went on to describe a significant shift Travelers made roughly a decade ago in how it approaches catastrophe underwriting. This move helped the company deliver record profits in 2024, despite it being one of the most active catastrophe years in the U.S., with $5 billion in net income.

“We moved away from having a single team managing all catastrophe risks,” Schnitzer said. Instead, Travelers formed dedicated teams for each type of peril—hurricanes, hail and wind events, wildfires, and more. Alongside this, they recruited experts such as climatologists, data scientists, environmental engineers, and others from outside traditional meteorology.

The dual goal was clear: (1) Develop a best-in-class understanding of each specific hazard, and (2) Apply advanced underwriting based on that scientific insight.

Before this change, Schnitzer said, the company’s catastrophe losses generally mirrored its market share—essentially hoping not to be overexposed when storms struck. Since implementing the new structure, however, Travelers has significantly outperformed relative to its share of the market, and not by shrinking. “We’ve continued to grow our book of business.”

Travelers has also improved its catastrophe claims processes, enabling the company to settle 90% of claims within 30 days following a natural disaster. Schnitzer noted the major impact this has on customers. “If you’re hit by a hurricane in September, that could mean the difference between spending the holidays in a hotel ballroom or back in your living room,” he said.

“Claims degrade over time,” he continued, underscoring that faster resolution benefits both customers and shareholders by ensuring accurate pricing and quicker settlements.

Climate Change: One Piece of a Bigger Puzzle

While acknowledging the urgency of climate change, Schnitzer added important context: “Climate change is a real concern—I feel a strong sense of responsibility about it for the sake of my kids and grandkids,” he said. However, Travelers’ internal data—and broader independent research—indicates that other factors are playing a larger role in rising catastrophe losses.

According to Schnitzer, these factors include urban expansion, economic inflation, outdated infrastructure, and building code deficiencies. “This isn’t to downplay climate change,” he clarified. “But when deploying capital, it’s critical to understand all contributing factors. You have to untangle those threads.”

He added that policy makers also need evidence-based insights to address climate-related issues effectively.

Insurance in the Future: The Case for Scale

As the conversation continued, Schnitzer also discussed Travelers’ $1.5 billion annual investment in technology and artificial intelligence. This spending supports strategies to counteract social inflation, evolving workforce needs, and process innovation. His overarching message: Size will increasingly determine success.

In response to Wilkinson’s request for a bold industry prediction, Schnitzer said: “In the future, scale will be more important than ever. In the past, small niche players could thrive. That’s going to get tougher.”

He elaborated: “Travelers isn’t the only company in a strong position, but there aren’t many that can match our level of meaningful investment in advanced technology, with the data, the capital strength, and the risk capabilities to support it.”

These capabilities, he added, also influence reinsurance costs and availability—further tilting the playing field toward larger, well-capitalized insurers. Over time, he anticipates a shift in premium volume from smaller players toward companies that both operate at scale and utilize that scale effectively.

Earlier in the session, Schnitzer described artificial intelligence as a game-changer for the insurance industry, citing Travelers’ AI-enabled processing of first notice of loss and straight-through claims resolution for about half of its caseload.

In specialty lines like management liability, where applications often arrive via email or fax, Schnitzer said AI has reduced the time needed to process submissions from two hours to just two minutes. “With thousands of submissions coming in each month, that’s a huge efficiency gain,” he noted.

He also pointed out that speed is often the deciding factor: “Our agency partners tell us the first quote usually wins the business. So being fast gives us a real advantage.”