Travelers 2004 Annual Report Download - page 114

Assets available to mitigate loss
Defective workmanship/latent defects
Financial strategy of insured
Changes in statutory obligations
Geographic spread of business
Personal Automobile
Personal automobile includes both short and long tail coverages. The payments that are made quickly
typically pertain to auto physical damage (property) claims and property damage (liability) claims. The payments
that take longer to finalize and are more difficult to estimate relate to bodily injury claims. Reporting lags are
relatively short and the claim settlement process for personal automobile liability generally is the least complex
of the liability products. It is generally viewed as a high frequency, low to moderate severity.product line.
Overall, the claim liabilities for this line create a moderate estimation risk.
Personal automobile reserves are typically analyzed in five components: bodily injury liability, property
damage liability, no-fault losses, collision claims and comprehensive claims. These last two components have
minimum reserve risk and fast payouts and, accordingly, separate factors are not presented.
Examples of common risk factors that can change and, thus, affect the required personal automobile
reserves (beyond those included in the general discussion section) include:
Bodily injury and property damage liability risk factors
Trends in jury awards
Changes in the underlying court system and its philosophy
Changes in case law
Litigation trends
Frequency of claims with payment capped by policy limits
Change in average severity of accidents, or proportion of severe accidents
Subrogation opportunities
Degree of patient responsiveness to treatment
Changes in claim handling philosophies
No-fault risk factors (for selected states and time periods)
Effectiveness of no-fault laws
Frequency of visits to health providers
Number of medical procedures given during visits to health providers
Types of health providers used
Types of medical treatments received
Changes in cost of medical treatments
Degree of patient responsiveness to treatment
Personal automobile book of business risk factors
Changes in policy provisions (e.g., deductibles, policy limits, endorsements, etc.)
Changes in underwriting standards
Homeowners and Personal Lines Other
Homeowners is generally considered a short tail coverage. Most payments are related to the property portion
of the policy, where the claim reporting and settlement process is generally restricted to the insured and the
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