Travelers 2006 Annual Report Download - page 57

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Structured settlements..........Periodic payments to an injured person or survivor for a determined
number of years or for life, typically in settlement of a claim under a
liability policy, usually funded through thepurchase of an annuity.
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 is not one of the two
parties to the insurance contract. Insuredliability 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 insuranceprotection against losses inexcessof amounts
covered by other liability insurancepolicies or amounts not covered
by the usual liability policies.
Unassigned surplus ............ Theundistributed and unappropriated amount of statutory surplus.
Underwriter................... An employee of aninsurance 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’s or reinsurer’s process of reviewing applications for
insurance coverage, and the decision as to 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 tonet 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............ Theportion ofpremiums written that is allocable to the unexpired
portion of the policy term.
Voluntarymarket.............. The market in which a person seeking insurance ob tainscoverage
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.
Workers’ compensation. ........ A system (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.