Travelers 2007 Annual Report Download - page 52

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.
Ground-up analysis .......... A method to estimate ultimate claim costs for a given cohort of
claims such as an accident year/product line component. It involves
analyzing the exposure at an individual insured level and then
through the use of deterministic or stochastic scenarios and/or
simulations, estimating the ultimate losses for those insureds. The
total losses for the cohort are then the sum of the losses for each
individual insured.
In practice, the method is sometimes simplified by performing the
individual insured analysis only for the larger insureds, with the
costs for the smaller insureds estimated via sampling approaches
(extrapolated to the rest of the smaller insured population) or
aggregate approaches (using assumptions consistent with the
ground-up larger insured analysis).
Guaranteed cost products ..... An insurance policy where the premiums charged will not be
adjusted for actual loss experience during the covered period.
Guaranty fund ............. A state-regulated mechanism that 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 insurance policy 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.
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