Travelers 2004 Annual Report Download - page 49

Glossary of Selected Insurance Terms
Accident year ...................... Theannual calendar accounting period in which loss events occurred,
regardless of when the losses are actually reported, booked or paid.
Adjusted unassigned surplus .......... Unassigned surplus as of the most recent statutory annual report
reduced by twenty-five percent of that year’s unrealized appreciation
in value or revaluation of assets or unrealized profits on investments,
as defined in that report.
Admitted insurer ................... Acompany licensed to transact insurance business within a state.
Annuity .......................... Acontract that pays a periodic benefit over the remaining life of a
person (the annuitant), the lives of two or more persons or for a
specified period of time.
Assigned risk pools ................. Reinsurance pools which cover risks for those unable to purchase
insurance in the voluntary market. Possible reasons for this inability
include the risk being too great or the profit being too small under the
required insurance rate structure. The costs of the risks associated
with these pools are charged back to insurance carriers in proportion
to their direct writings.
Assumed reinsurance ................ Insurance risks acquired from a ceding company.
Broker ........................... Onewhonegotiates contracts of insurance or reinsurance on behalf of
an insured party, receiving a commission from the insurer or reinsurer
for placement and other services rendered.
Capacity .......................... Thepercentage of surplus, or the dollar amount of exposure, that an
insurer or reinsurer is willing or able to place at risk. Capacity may
apply to a single risk, a program, a line of business or an entire book
of business. Capacity may be constrained by legal restrictions,
corporate restrictions or indirect restrictions.
Case reserves ...................... Loss reserves, established with respect to specific, individual reported
claims.
Casualty insurance .................. Insurance which is primarily concerned with the losses caused by
injuries to third persons, i.e., not the insured, and the legal liability
imposed on the insured resulting therefrom. It includes, but is not
limited to, employers’ liability, workers’ compensation, public
liability, automobile liability, personal liability and aviation liability
insurance. It excludes certain types of losses that by law or custom are
considered as being exclusively within the scope of other types of
insurance, such as fire or marine.
Catastrophe ....................... Asevere loss, resulting from natural and manmade events, including
risks such as fire, earthquake, windstorm, explosion, terrorism and
other similar events. Each catastrophe has unique characteristics.
Catastrophes are not predictable as to timing or amount in advance,
and therefore their effects are not included in earnings or claims and
claim adjustment expense reserves prior to occurrence.
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