Travelers 2004 Annual Report Download - page 52

Inland marine ...................... Abroad type of insurance generally covering articles that may be
transported from one place to another, as well as bridges, tunnels and
other instrumentalities of transportation. It includes goods in transit,
generally other than transoceanic, and may include policies for
movable objects such as personal effects, personal property, jewelry,
furs, fine art and others.
IRIS ratios ........................ Financial ratios calculated by the NAIC to assist state insurance
departments in monitoring the financial condition of insurance
companies.
Large deductible policy .............. Aninsurance policy where the customer assumes at least $25,000 or
more of each loss. Typically, the insurer is responsible for paying the
entire loss under those policies and then seeks reimbursement from
the insured for the deductible amount.
Lloyd’s .......................... Aninsurance marketplace based in London, England, where brokers,
representing clients with insurable risks, deal with Lloyd’s
underwriters, who represent investors. The investors are grouped
together into syndicates that provide capital to insure the risks.
Loss ............................. Anoccurrence that is the basis for submission and/or payment of a
claim. Losses may be covered, limited or excluded from coverage,
depending on the terms of the policy.
Loss adjustment expenses (LAE) ...... Theexpenses of settling claims, including legal and other fees and the
portion of general expenses allocated to claim settlement costs.
Loss and LAE ratio ................. ForSAP, it is the ratio of incurred losses and loss adjustment
expenses to net earned premiums. For GAAP, it is the ratio of
incurred losses and loss adjustment expenses reduced by an allocation
of fee income to net earned premiums.
Loss reserves ...................... Liabilities established by insurers and reinsurers to reflect the
estimated cost of claims incurred that the insurer or reinsurer will
ultimately be required to pay in respect of insurance or reinsurance it
has written. Reserves are established for losses and for LAE, and
consist of case reserves and IBNR reserves. As the term is used in this
document, “loss reserves” is meant to include reserves for both losses
and LAE.
Loss reserve development ............ Theincrease or decrease in incurred claims and claim adjustment
expenses as a result of the re-estimation of claims and claim
adjustment expense reserves at successive valuation dates for a given
group of claims. Loss reserve development may be related to prior
year or current year development.
Losses incurred .................... Thetotal losses sustained by an insurance company under a policy or
policies, whether paid or unpaid. Incurred losses include a provision
for IBNR.
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