Okay, thanks so much. We are going to move on. Our next guests are Jack Roche, CEO, and Jeff Farber, CFO of the Hanover Group. Jack is going to start with some introductory comments, and then we'll move into Q&A. As always, if you have questions in the audience, please don't hesitate to raise your hand. We will get you the mic, and that way we can ensure you're getting what you need out of this session with Jack. Let me try that again. With that, Jack, the floor is yours.
All right. Thank you, Meyer, and appreciate the opportunity to be here with you today. I'm also appreciative of the opportunity to just give you a brief update on the Hanover, and dive into some good Q&A. And I think I would just headline the fact that we're really excited about where we are from a financial position and financial trajectory perspective that allows us to lean into this complex and dynamic market, and start taking the enterprise to the next level. We've worked hard to navigate some pretty difficult challenges with the weather and with the changing loss patterns.
I think we've demonstrated to ourselves and to our investors that we have the right agility and capability to take on some of those challenges, and in relatively short order, reemerge as a top performer from a bottom-line perspective. S o now, we're focused on using that broad-based profitability across four major businesses to our advantage, frankly, because I don't think the world's going to get any less complex or dynamic.
W e believe that the companies that have diversified earning stream and real strong capability are going to be able to both navigate some of the challenges but take advantage of the opportunities that naturally come from these type of market changes, so just real quickly, in personal lines, we believe we're one of the top account writers in the independent agency channel, albeit in the 20 states we choose to do business.
We have an amazing small commercial platform that focuses not only on the point-of-sale-oriented business, but the non-point-of-sale position, which puts us in an enviable position at a time when agents or brokers are trying to consolidate markets and do more with less. Our specialty business now is approaching $1.5 billion and growing and generating tremendous returns. Nine businesses, 20-something products, all focused on the agents' building specialization, and then last but not least, our middle market business is in the best place it's been in some time.
We are navigating the challenges that come in the higher limits business, but we believe that's going to be huge upside for our company as we continue to show the right level of discipline. So all in, we're in the best position, frankly, we've been in, in many, many years, and excited about the opportunities ahead.
Great! Thanks so much. I want to start with the big picture question. I get a lot of introductory questions about the cycle, and less about other things that matter tremendously, but are maybe harder to put into a chart. And one of the things where I think Hanover distinguishes itself is with its agency strategy. I was hoping you could talk about how, when you're going to either, existing agencies looking for deeper penetration or for newer agencies, how you differentiate yourself from the competition.
Yeah. Listen, a real important tenet to our strategy is being selective in who we do business with, but bringing forward a value proposition to the agents that are winning in the space, both big, medium, and small, to give them specialized capabilities, but also give them a bit of a franchise approach towards that , frankly, the industry has lost over time. Many of our most capable competitors frankly over-distribute and have become distribution agnostic over time.
Doesn't make them bad companies, but it makes it really opens up an opportunity for a company like ours, that's big enough to invest in businesses that are specialized, but also agile and capable of focusing more and more on agent strategy versus just ours. And the biggest way we differentiate ourselves with the consolidators, as well as the best mid-size agents across the land, is we've demonstrated the ability to listen and understand and digest the agent strategy, both nationally and locally, and bring our capability set to help them advance.
We believe when we do that well, we get more than rewarded, but that's really what distinguishes us on a daily basis. And I think you know we've been able to build things like our Agency Insight portal and other analytical tools that make that dialogue less anecdotal and more specific about: How do we build those future partnerships in a way that's mutually beneficial?
Great. Thank you. Agency consolidation has been a constant, really, since w ell, I started in the 1990s, and it predates me by a few decades. One of the more recent themes has been the largest brokerages out there, focusing more on the smaller end of the middle market or the small account market. And I was wondering, given that that's a lot of where Hanover focuses, how does that aspect of consolidation impact your growth strategy? What are the costs? What are the opportunities?
Yeah. Listen, if we're honest with you, over time, we wondered, frankly, how the flow businesses would factor into our value proposition. Many of the large and medium-sized agents get up every day and think about writing mid-size accounts or greater and generating really good returns and adding value. But the reality is that many of those agents have spent the last decade buying agencies, integrating them, and have more small commercial and personal lines and, frankly, smaller specialty business than they ever expected.
The other reality of that situation is that that business, that part of their portfolio, probably has the lower end of the EBITDA margins.
Mm-hmm.
And they need the most help in terms of either consolidating that or creating new efficiencies for this business that they've paid a fair amount of money for. So our relevancy in the distribution system has actually gone up. Even though we spend a lot of time on the specialized businesses and try to be in that day-to-day flow of transactions, our dialogue increasingly has been in the flow businesses all the way through the specialty, on how can we help them improve their EBITDA margins? Where should we be account-centric versus more, specialized by line of business or sector?
And, and I would say that half of our dialogue with the national folks now is really on that aspect of our value proposition.
Great, so I want to segue to that, to the TAP platform, because I imagine that's one of the areas or one of the opportunities for improving efficiency. Is that something you could talk through, where it is, where it's going, and how it helps win share?
Sure, so TAP Sales is our point-of-sale platform that transcends from personal lines to small commercial, and now many of our smaller specialty lines are plugged into it. Not necessarily transactionally, but an account manager or a CSR inside of an agency can get access to those various business segments in our point-of-sale system today better than they ever have. The investment we made in TAP Sales, particularly in small commercial, was a really important one.
It has now put us in the top tier of day-to-day transactions. It's created efficiencies at the account manager level by up to 50% in terms of time spent on location input. Imagine the talent challenges that agents have today. When you can take your day-to-day transactional system and start cutting down time by half, expanding your appetite, and through your profitability, being able to be more offensive, all of those things are incredibly attractive to agents when they're trying to gain those efficiencies and do more with less, as I said, so we're going to build on that.
We're currently almost through with adding our workers' comp line into that, increasing our straight-through so that there's less touch. Our responsiveness for many of those lines now are hours instead of days when there are kick-outs, so our day-to-day proposition for account managers and CSRs has really never been better.
Okay, and just as a quick follow-up on that, the agency response to TAP Sales?
We've really exceeded every metric that we set out for ourselves when we made that investment, particularly in small commercial. We're getting more account managers using the system, the uptick of number of accounts that they're putting into the system, the efficiency coming through, and the close rates. All of the major benchmarks that we set for ourselves a couple of years ago, we've met or exceeded, so we're couldn't be happier with the way that platform has extended our small commercial capabilities.
Should we look at growth, whether it's policy counts or premiums, as the primary outcome that we'll be able to see?
Yes, but I think what we're going to further demonstrate is, we didn't just put a new platform in place. We converted our pricing to be able to take on the higher end of the small commercial. More and more of our non-point-of-sale business is being able to be levered into the TAP Sales point-of-sale system, but in a way where we price it with the same level of precision. We're going to demonstrate not just growth overall, but how we're able to kind of further diversify our offering to agents and become more relevant at a time when they have way too many markets for their lower-end premium.
W ith our Agency Insight tool, when we go out there and show people how fragmented their business is, it just makes their anxiety go up. And so what we're bringing forward is solutions, not just data to show them that the inefficiency in the smaller end of the market really needs to be resolved, and we simply have more and more tools to help them.
Okay, that's great. I want to drill down to one thing that you just said, which is that agents have too many markets that they're dealing with. This has been a long-term thesis of mine is that at some point in time, there is an inefficiency. To be blunt, there are probably too many companies out there relative to the need, and there are expenses associated with that. How important of a factor is that to your distribution network?
Right now, as you've seen, as organic growth on the agency side starts to subside a little bit, the focus, whether you're preparing to do an IPO or whether you're trying to satisfy your private equity partners or you're trying to build and maintain your independence, you've never been more focused on your economics.
Right.
And so I think folks are looking at, "What are the various ways in which I can better serve customers, preferably in a digital way, but do it in a more economical way?" because the smaller end of the business just keeps coming at you. And so many agents have tried to either, you know, put it in a box or separate it, and what they realize is that is where the growth of the economy comes from, and being better able to serve that business is better than trying to kind of push it aside and treat it like a less significant part of their portfolio.
So we're I can tell you, we are gaining more and more traction with the biggest agents in the land around: How can we take their market consolidation. You have to segment it in ways that it is executable. What people don't realize is the last two decades we've gotten more proprietary as an industry in underwriting and in pricing.
Mm-hmm.
It's simply not as simple as everybody thinks it is. So you need somebody that not only has a breadth of appetite and some pricing capability, but has a demonstrated skill and experience in sorting through the portfolio with our analytical tools, and allowing them to focus those consolidation efforts in a way where they actually get something done. And we are making meaningful progress, but if everybody just wants to take their non-strategic carriers and try to jam it into their strategic carriers, they're being very naive about what it takes to get to do more with less.
Right. No, that's very helpful. I want to shift to talk about... I'm sorry, to shift to talk about individual lines of business, and you mentioned that there's this simplistic assumption for pricing, and I'm gonna ask this question intentionally simplistically, and that is, the industry has struggled with commercial auto, right? I completely get that it is ground zero for social inflation. You've got very, very sympathetic plaintiffs in many cases, and a very aggressive trial bar.
But it seems to me, and I haven't done this work in 25 years, but it seems like, okay, all we need to do is, in our pricing assumptions, assume that severity is two points higher than we used to and then you get to adequate pricing. But we haven't yet seen the industry get to that point where, okay, yes, severity is high, pricing is high enough to reflect that. What am I missing in the process? What are the complexities that sort of get in the way of that happening?
Yeah, commercial auto has been a challenge for the industry for a dozen years, and as much as many in the industry think they're making progress, the severity trend seems to be moving away, and it is clearly the epicenter of lawyer involvement and social inflation, and that doesn't seem to be abating really anytime soon. Fortunately, for The Hanover, it's a small portion of our overall business. It's less than 7% of the business. And for us, we tend to write smaller accounts, we tend to have smaller vehicles, and we tend to have smaller limits.
W hile we're gonna be going after this and getting additional rate, I feel like, you know, with our conservative reserving, I think we're in good shape. But the industry really needs to deal with it, and there's a lot of solutions. I think price increase is really just one of them. The industry is really focused on how to tame the legal environment a bit, and that's gonna be state by state. It'll take some time, but there are a lot of things happening.
Right, and we have seen some states actually.
Georgia.
C ome on board.
Florida, a few states.
Right.
Absolutely.
This is a two-prong question, because if you go back several years, and it's really early in the period of time when people were talking about social inflation getting worse, so Hanover said, "You know what? We're gonna focus on regions or, jurisdictions," if you will, "where the courts are less difficult," so the two questions I want to ask are, one, how is that manifesting itself in your commercial auto exposure? And two, what's the next step for that for general liability itself, which is, as I understand it, where the strategy first emerged?
Yeah, I think, you know, as far back as really the latter part of 2011, we clearly acknowledged that something was changing in terms of the duration of liability cases and the increased involvement of lawyers. And so we started pricing. I can remember in 2012, you know, 8- 10 points a price, and got back up over 10. So this is, like Jeff said, 12 years of pretty substantial pricing. Turns out it's simply not enough.
Right.
Right? The environment was getting worse along the way, and I think what we did first in auto is we eliminated the vast majority of any monoline auto and assumed that that was no longer a good value proposition for us. We downsized our private manufacturing fleets, durable wholesale-type accounts that had auto as kind of their lead line, we moved away from. We also took a very serious look at the geographic concentrations or penetrations, because, you know, there are states like Texas, Southern California, and even Downstate New York, that just were magnifying the problem.
So we got after it. When we start, we also decided to remove ourselves from monoline or unsupported umbrella, because that's essentially excess auto.
Right.
Then we, as you saw, really kind of I think around 2018, we started to presume that that was going to start to leak its way into the slip, trip, and fall type of exposures. Because that's the next biggest category that attorneys were easily able to find claimants that they could exercise on. Auto is easy, because as soon as you have an accident, it gets posted at the police departments, it gets spread around, and you have letters from six attorneys. But when you slip in the grocery store, you know, it's a little bit harder for them to figure out.
It's more volunteerism. So but it's penetrated there. We made some meaningful adjustments, like you referenced, in the big cities. We got off a lot of real estate, a lot of OL&T exposures. And we did this all before I think the industry started to talk more and more about legal system abuse. So I think that's what we've been able to demonstrate to investors is that, listen, everybody's got this problem to different degrees, but have you done something about it beyond price that hasn't been sufficient? And I think we make a good case.
For example, in auto, over the last five years, we actually have a lower level of PIF in commercial auto. We compete against some people that have grown commercial auto in a meaningful way during that period, and likely have deep regrets about what that did to their reserve position and their results.
So I think that's what we commit to doing, is being very transparent with our investors, that this is how we're growing the business, this is where we've seen some progress, this is where we've seen some things not work out, and have a reputation for dealing with things along the way, and not letting them build up to the point where they become, you know, huge problems for the company.
The combination of being selective about geographies, being selective about particular industries that we've focused on, has manifested itself in the last five years of having substantially reduced frequency of these matters. The severity is the severity. I n some cases, we can moderate the severity by avoiding some judicial hellholes and all that, but severity is up a lot. But thank goodness our frequency of matters is down a lot, which allows us, with some good reserving and some price, to be able to have a conservative balance sheet.
Okay, fantastic. When we take that maybe in the other direction, from a growth mindset, what's the process and oh, sorry, process, little Canadian of me, and timeline for adding new industries to core commercial?
So we'll continue to flex our appetite. And I would say that in small commercial, we are very diverse in terms of the industry sectors. I don't think there's a lot of areas where agents said, "Hey, we need you to..." Well, maybe habitational is an area where we're particularly conservative. But beyond that, I think we're seen as a pretty broad-based appetite in small. In middle, we've been more discriminating, for good reason.
Mm-hmm.
But I would say most of our appetite is more of percentage of penetration or percentage of your portfolio. So for example, we have a moderate level of concentration in construction. There are times when the construction business is more palatable, and there's other areas where you have to contract. Human service agencies right now is a particularly challenging sector, but our expectation is as the market contracts and pricing really comes through and terms and conditions change, that we'll flex back in and be a little bit more robust at the right time for those sectors.
So I don't think there's any particular area sectorially that we're missing out on or that we think is a big part of our next steps, but it's the ability to kind of be more agile around what levels of growth you're gonna have in each of the subsegments and geographies. We have a model where our local RVP understands what we bring to the table, but it's their job to help us understand what is our portfolio gonna look like in that particular state.
Right.
And that is super important, because what we look like in Texas is a lot different than what we look like in Maine, and it needs to be. And it's not just about what economy lives there, it's about what are the legal and CAT, and other exposures that make our portfolio kind of different by geography. It's a big part of our secret sauce.
So when we think about that, just as a follow-up, the geographic growth ambitions, how does this enhance or constrain your growth appetite?
It does both. We'll have all of our field leaders into our home office next week, and they will present, as they do twice a year, what their proposition is. Why should they get a stronger capital allocation? Are they in a position for growth, or do we need to be patient and see them continue to make some modifications in their underwriting and their portfolio management? Again, that's a big part of how we run the company. But as you would imagine, whether it be personal lines or commercial lines, we have more and more geographies that are ready for some elevated growth.
We're never gonna be one of those companies that's gonna be growth for growth's sake. It's just not how we're born. But we are more diversified in our earning stream, and we have more geographies and businesses that are hitting our hurdle rates.
Mm-hmm
T hat allows us to kind of elevate the growth of the overall firm. But it still comes back to one geography at a time. Where are we? What steps do we need to take? But if you have a dozen-plus states that are hitting on all cylinders, our expectation is that we're, you know, ramping growth and growing our business disproportionately there.
Okay, fantastic. I did want to take a second just to look through the room to see if there are questions. Go ahead. Clayton, they'll just bring you the mic.
Okay. Just on a high level, when you think about the business cumulatively across the board, and you think about the general pricing trend and loss cost trend, and you think about your forward-looking accident year loss picks, can you just talk about that trend and how you think about the margin from here, and if it can actually get better, or it's just too difficult of a macro backdrop and too much competition?
Yeah, I'll make a couple comments, and then, Jeff, you jump in. I, you know, I've done this. I've been in this business a while and realize that pricing versus loss trend is super important, but it's anything but a static measure. So we think about it as, right now, we feel like we're pricing our product overall at or above loss trend in all of our major sectors, but we also think out into the future. If I use middle market as an example.
Right now you're seeing some compression on the property side because a lot of people have priced their product more aggressively, have changed some terms and conditions, and so in some ways the pricing should decelerate. On the other side, I think we're a little slow as an industry to recognize the liability pricing that's required, given the way those trends have gone about it. As an account writer, for the most part, we balance that so we're not, you know, too schizophrenic. But I believe as we go through the rest of this year and into next year, you're gonna see a significant hardening on the liability side.
So that's that forward-looking approach is what allows us to kind of think about, right today, we're certainly hitting the pricing targets that we want, but we are starting to position ourselves for when some of the less capable or more disadvantaged folks on the liability side start to reduce their appetite or accelerate their pricing, where can we take advantage of that, or where can we actually turn that into some accelerated offense? But overall, I think the answer to your question is, I think this is a pretty rational market. I think people, there's some areas where there is some pricing pressure.
Well, you've got some sectors that are performing in the low eighties in terms of a combined ratio. That's not, you know. There should be some competition there. But I go back to the diversification of our earning stream. What makes us really excited about our proposition going forward is we're not overly dependent on any one sector, right? We have four major businesses. We have almost 20 business sectors below that.
And we have optionality in terms of if we see some compression in certain parts of our specialty business, or if there's some accelerated competition in certain small commercial states, we have our personal lines business that's come back into its own. We have a middle market business that will likely take advantage of some hardening on the liability lines, and that really gives us some real power going forward.
To talk about a baseline, I'll talk about our year-to-date results, because it tends to eliminate the vagaries of individual quarters by segment fluctuations. As I think about where I think we had an 18% ROE year to date, so we're performing at a pretty solid level. If I go segment by segment, the core commercial segment had slightly heavier losses, largely driven in the first quarter property. I think there's room for improvement on that basis, on that benchmark. Specialty had a very strong six months, particularly in the second quarter, and I think that should continue at that level, but hard to say.
Personal lines has some room for improvement as the continuation of earned price above loss trend should show some improvement as we go forward. That, coupled with the ongoing increases of NII based on cash flows that have been strong, and also buying new bonds at higher interest rates that are rolling forward, gives us confidence as we go forward for the rest of the year.
Okay.
And then, Mark, let me just get the mic to you.
Just as a follow-up on that, you said the market's pretty rational. You know, commercial property, maybe like there's a little bit of a overcorrection going on, you know, in certain types of markets, coastal markets or, you know, lines that have had some losses or something. What about personal lines? Like, do you think, are we moving into a more moderating rate environment that's more consistent with kind of low- to mid-single-digit claims inflation long term that everyone believes?
Or do you think there's risk, as we look out kind of 12-18 months, that there's a need for or potential risk of overcorrection in personal lines, just like there has been in some areas of commercial property this year?
Sure. Yeah, I agree with some of your view on commercial property, and I think you know about us. We really are not an opportunistic property market, right? We don't over-index on E&S property or coastal property. So we see that, but we don't feel terribly affected by it. In personal lines, I'll succinctly tell you that I think they're the personal lines business is further segmenting itself, right?
And the reason why I emphasize our account orientation is because while those that focus almost exclusively on auto are headed down a dangerous path of becoming a price war and potentially overcompensating on the back end of this cycle, on the other side, even the folks that had intentions of being a bundler are doing a lot less bundling these days because home is a challenge. People are a little bit worried about whether the weather patterns are gonna continue. And so we're seeing inside the IA channel, which still represents about 38% of the market, some real stabilization.
And I'll remind you that there's only a couple of nationals. There's a couple of big super regionals, like we are, in the personal lines base in 20 states, and then a whole bunch of smaller mutuals and regionals. And so two-thirds of the personal lines market in the IA channel, which has been pretty stable, is driven by companies that are behind, either because they haven't gotten their insurance -to-values up yet, they haven't reconciled their property aggregations, they don't have the pricing sophistication that the nationals or the mid-sized companies have.
So there's still a fairly challenging market, particularly in the IA channel, for somebody to say, "How do I- I can chase some auto pricing, but then I got to place the home with somebody," and there's not a lot of monoline home players, particularly in Middle America. So we feel like we're in a pretty good spot, where our margins are in a good place, we're still getting relatively good price, and we just can't get greedy.
We've got to keep being thoughtful about what the right pricing is for a total account that allows us to hit the returns that we want to do, but provide some relative stability because the consumers are hurting, right? This is a challenging time for many consumers in the personal line space. So we monitor the direct-to-consumer market and what's happening there. We pay attention to the captive channel. What I would tell you, inside the IA channel, we still feel like we're in a really good position, and it's reasonably responsible in terms of how the pricing patterns are playing out. All right. Does that hit it?
Yeah. Thank you.
Okay, perfect. I want to spend a little time talking about specialty, maybe from two different perspectives. First, just a broad overview, how much of your specialty book involves unusual lines, where you've got some lines or customers in the core commercial segment?
Right. So the strength of our specialty business is that we have a number of businesses that create an expert-to-expert experience, where an agent has expertise in management liability, or professional liability, or some healthcare space, surety, where we handle that, I don't want to say a monoline basis, but on a kind of expert-to-expert experience. We may or may not write the casualty or the other lines, but we're still dealing with an expertise-based model.
Mm-hmm.
But because we play on the lower end of the spectrum, kind of small to mid-size accounts, we have an added ability to go out to a number of our agents and see where we can cross-market or cross-sell. If you take away from some of the portal business that we have for, like, Builders risk or some of the monoline stuff that is just literally off the point of sale system, it's roughly between 35%-40% of our specialty business has some connectivity to the core lines.
I quite frankly think that's healthy, because what we don't want to do is let cross-sell become obligatory. It's really hard to have appetites across multiple lines or multiple businesses and get it right. So I think what we've been able to do is, I think that percentage, 35%-40%, is probably industry leading particularly for management liability and professional liability.
I think many of the people we compete against either get their business exclusively through wholesalers, which means they're, by definition, getting a monoline proposition, or they're dealing with the brokers of the bigger accounts, where it is they're really not even attempting to do any cross-sell. So I quite like the way that mosaic plays out for us, and we have different strategies to kind of bring that forward. And our core lines' underwriters, both small commercial and middle market, they have incentives to go out and find the desirable specialty lines that are associated with our core lines.
And that is, when you hear Bryan Salvatore talk, that's what excites him, is that he's part of a company that thinks like that and can help extend his specialty business into the core line area.
Okay, fantastic. And then another specialty line that can mean a lot of things is marine. I was hoping just to drill down in terms of what you currently focus on in marine and maybe what the growth prospects are expanding that definition.
Yeah, I would say marine is probably our strongest specialty business, frankly, consistent high profitability, but also our growth prospects going forward. It's approaching $500 million. W e have some of the best talent in the industry. When you go out to the core independent agents, there's only two or three markets that they depend on a regular basis for: builders risk, contractors equipment, motor truck cargo, you know, things like instrument floaters. There's all these non-fixed property exposures that are best underwritten and placed over time by marine underwriters.
We do a small portion of ours in the ocean marine, but that's really not our specialty. We're more in the inland marine. But it's that breadth of product line, i n fact, from a strategy standpoint, we try not to get any sub-sector of the marine business to be more than 20% of the portfolio, because over time, things ebb and flow, and it's that diversification in the marine business that has allowed us to consistently produce sub-90 combined ratios and continue to grow the business.
So couldn't be more excited about it. The leadership that we have in that business is second to none, and we have huge headroom ahead for us in the marine business.
Okay. And then as a follow-up on specialty, and I always define specialty as reliant more on underwriting skill than maybe simply analytics. I know that's a little bit of a generalization, but what does Hanover do to attract, to retain, and to train underwriting and claims talent?
On the claims side?
And on the underwriting side.
On the underwriting side. Yeah, I mean, one of your premises is that this, y ou know, you go all the way from personal lines on one side of the spectrum to maybe some of the most bespoke specialty businesses, highly analytical, highly actuarial to you know, much more of an art than a science.
Exactly.
Data is important across all of our businesses, but data analytics and data science, and the ability to put multivariate products together are most important in personal lines and small commercial. Frankly, intuitiveness and experience, and then figuring out how to get some efficiencies on the specialty business is kind of the continuum that we work with.
I think one of the strengths, and the reason why I think we're winning the talent war, is because people look at, if you just stay on the specialty side of the business, they can be part of building something and helping us redefine operating models on the small to mid-size business. This is an exciting time, that if you are investing in technology, and in data and analytics, and you have people that like working on that small face value business, the game is changing.
Whether it be building portals, working more directly with agents, giving them some opportunity to do some pre-underwriting in a box environment, or just leveraging the service center environment that we've created. We've got more and more specialty business where they're saying, "Hey, can you just service this business for me? Because it's some of the lowest EBITDA margins we have." On the claims side, I think there's a parallel to that. The companies that are leaning into the operating model change, and figuring out what they have to touch, what they don't have to touch.
Give you a small example. You know, six years ago, we had 18 appraisers that would have to go out and see probably 80% of the auto accidents that we had, and it was a very archaic way, but the COVID changed that overnight.
Yeah.
And now what we have is a set of digital tools and inside appraisal folks that can do.
Pardon.
God bless you.
Thank you.
Four or five X, in terms of workload. The efficiency and the effectiveness of the appraisals is improved, and the customer experience is through the roof. Our NPS scores in claims are the highest they've been in some time. So it's so ironic that we're at a, i f you're focused on this, and you know what part of the value chain has an opportunity to improve, the adoption rates are way up. People are just they have, they wanna do things digitally.
They wanna get things done, and we're leaning into that environment and improving expenses, customer experience, and frankly, creating new roles for talent to be able to come in and say, "Hey, that job is more enticing to me than being Hector the inspector or driving out and looking at cars for a living." That's just, frankly, not that exciting of a job anymore.
It's not that rewarding. We've got 30 seconds. I'm gonna throw in a quick question on the personal line side. You're in 20 states now. In X years, what number will that be?
I don't know, is the right answer. I think some of that will be how the personal lines plays out. We always have, you know, a set of next states that we would consider. We also have a list of states that probably never.
Good.
And those states we've been pretty disciplined on. I think it's gonna be a function, frankly, of how the game plays out in terms of independent agency persistency in the channel, whether our account orientation continues to evolve as something that's truly distinctive in the marketplace. If it is, I could see us being in another half a dozen states. I don't see it ever being 40-plus.
Some of the states are just undesirable from either a legal or a weather perspective, and frankly, we can be a super regional in personal lines and fit our agents' desires for that business. In commercial, we think of ourselves as really a full national player.
Right. Perfect. With that, we've come to the end of our session. Please join me in thanking Jack and Jeff for an excellent session.
Yeah.
Thank you.