Travelers 2005 Annual Report Download - page 27

15
rate regulation. The pace at which an insurer can change rates in response to increased costs depends, in
part, on whether the applicable state law requires prior approval of rate increases or notification to the
regulator either before or after a rate change is imposed. In states with prior approval laws, rates must be
approved by the regulator before being used by the insurer. In states having “file-and-use” laws, the insurer
must file rate changes with the regulator, but does not need to wait for approval before using the new rates.
A “use-and-file” law requires an insurer to file rates within a period of time after the insurer beginsusing
the new rate. Approximately one-half of the states require prior approval of most rate changes.
Independent agents either submit applications to the Company’s service centers for underwriting
review, quote, and issuance or they utilize one of its automated quote and issue systems. Automated
transactions are edited by the Company’s systems andissued if they conform to established guidelines.
Exceptions are reviewed by underwriters in the Company’s business centers. Audits are conducted by
business center underwriters and agency managers, on a systematic sampling basis,across all of the
Company’s independent agency generated business. Each agent is assigned to a specific employee or team
of employees responsible for working with the agent on business plan development, marketing, and overall
growth and profitability. The Company uses agency level management information to analyze and
understand results and to identify problems and opportunities.
The Personal products sold through additional marketing channels utilize the same quote and
issuance systems discussed previously and exceptions are underwritten by the Company’s employees.
Underwriters work with Company management on business plan development, marketing, and overall
growth and profitability. Channel-specific production and claim information is used to analyze results and
identify problems and opportunities.
Product Lines
The primary coverages in Personal are personal automobile and homeowners insurance sold to
individuals. Personal had approximately 6.6 million policies in force at December 31, 2005.
Personal Automobile provides coverage for liability to others for both bodily injury and property
damage and for physical damage to an insured’s own vehicle from collision and various other perils. In
addition, many states require policies to provide first-party personal injury protection, frequently referred
to as no-fault coverage.
Homeowners and Other provides protection against losses to dwellings and contents from a wide
variety of perils, as well as coverage for liability arising from ownership or occupancy. The Company writes
homeowners insurance for dwellings, condominiums and rental property contents. The Company also
writes coverage for personal watercraft, personal articles such as jewelry, and umbrella liability protection.