Travelers 2005 Annual Report Download - page 56

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Subrogation....................... A principle of law incorporated in insurance policies, which
enables an insurance company, after paying a claim under a
policy, to recover the amount of the loss from another who is
legally liable for it.
Third-party liability. ................ A liability owed to a claimant (third party) who isnot one of the
two parties to the insurance contract. Insured liability claims are
referred to as third-party claims.
Treaty reinsurance................. The reinsurance of a specified type or category of risks defined
in a reinsurance agreement (a “treaty”) between a primary
insurer or other reinsured and a reinsurer. Typically, in treaty
reinsurance, the primary insurer or reinsured is obligated to
offer and the reinsurer is obligated to accept a specified portion
of all that type or category of risks originally written by the
primary insurer or reinsured.
Umbrella coverage................. A form of insurance protection against losses in excess of
amounts covered by other liability insurance policies or amounts
not covered by the usual liability policies.
Unassigned surplus................. Theundistributed and unappropriated amount of statutory
surplus.
Underwriter ....................... An employee 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 ...................... The insurer’sor reinsurer’sprocess 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.......... For SAP , 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. ........... Net earned premiums and fee income less claims and claim
adjustment expenses and insurance-related expenses.
Unearned premium ................ The portionof premiumswritten that is allocable to the
unexpired portion of the policy term.
Voluntary market .................. The market in which a person seeking insurance obtains
coverage without the assistance of residual market mechanisms.
Wholesale broker .................. An independent 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.