Travelers 2004 Annual Report Download - page 56

Underwriter ....................... Anemployee of an insurance company who examines, accepts or
rejects risks and classifies accepted risks in order to charge an
appropriate premium for each accepted risk. The underwriter is
expected to select business that will produce an average risk of loss
no greater than that anticipated for the class of business.
Underwriting ...................... Theinsurer’s or reinsurer’s process of reviewing applications for
insurance coverage, and the decision whether to accept all or part of
the coverage and determination of the applicable premiums; also
refers to the acceptance of that coverage.
Underwriting expense ratio ........... ForSAP, it is the ratio of underwriting expenses incurred less other
income to net written premiums. For GAAP, it is the ratio of
underwriting expenses incurred reduced by an allocation of fee
income and billing and policy fees to net earned premiums.
Underwriting gain or loss ............ Netearned premiums and fee income less claims and claim
adjustment expenses and insurance-related expenses. This profit or
loss calculation includes reinsurance assumed and ceded but excludes
net investment income.
Unearned premium ................. Theportion of premiums written that is allocable to the unexpired
portion of the policy term.
Voluntary market ................... Themarket in which a person seeking insurance obtains coverage
without the assistance of residual market mechanisms.
Wholesale broker ................... Anindependent or exclusive agent that represents both admitted and
nonadmitted insurers in market areas, which include standard, non-
standard, specialty and excess and surplus lines of insurance. The
wholesaler does not deal directly with the insurance consumer. The
wholesaler deals with the retail agent or broker.
Workers’ compensation .............. Asystem (established under state and federal laws) under which
employers provide insurance for benefit payments to their employees
for work-related injuries, deaths and diseases, regardless of fault.
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