Travelers 2005 Annual Report Download - page 52

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Fidelity and surety programs......... Fidelity insurance coverage protects an insured for loss due to
embezzlement or misappropriation of funds by an employee.
Surety is a three-party agreement in which the insurer agrees to
pay a second party or make complete an obligation in response
to the default, acts or omissions of an insured.
Guaranteed cost products ........... An insurance policy where the premiums charged will not be
adjusted for actual loss experience during the covered period.
Guaranty fund ..................... State-regulated mechanismwhich is financed by assessing
insurers doing business in those states. Should insolvencies
occur, these funds are available to meet some or all of the
insolvent insurer’s obligations to policyholders.
Incurred but not reported (IBNR)
reserves ......................... Reserves for estimated losses and LAE that have been incurred
but not yet reported to the insurer. This includes amounts for
unreported claims, development on known cases, and re-opened
claims.
Inland marine. ..................... A broad 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 ............. An insuranc epolicy 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. ........................... An insurance 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 .............................. An occurrence that is the basis forsubmission 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)..... The expenses of settling claims, includinglegal and other fees
and the portion of general expenses allocated to claim
settlement costs.