Travelers 2005 Annual Report Download - page 131

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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 handlingphilosophies
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 andsettlement process is generally restricted to the
insured and the insurer. Claims on property coverage are typically reported soon after the actual damage
occurs, although delays of several months are not unusual. The claim is settled when the two parties agree
on the amount due in accordance with the policy contract language and the appropriate payment is made
(or alternatively, the property replacement/repair is performed by the insurer). The resulting settlement
process is typically fairly short term, although exceptions do exist.
The liability portion of the homeowners policy generates claims which take longer to pay due to the
involvement of litigation and negotiation, but with generally small reporting lags. In addition, reserves
related to umbrella coverages have greater uncertainty since umbrella liability payments are often made far
into the future.
Overall, the line is generally high frequency, low to moderate severity (except for catastrophes), with
simple to moderate claim complexity.
Homeowners reserves are typically analyzed in two components: non-catastrophe related losses and
catastrophe loss payments.
Examples of common risk factors that can change and, thus, affect the required homeowners reserves
(beyond those included in the general reserve discussion section) include: