Travelers 2008 Annual Report Download - page 57

Second-injury fund .......... The employer of an injured, impaired worker is responsible only for
the workers’ compensation benefit for the most recent injury; the
second-injury fund would cover the cost of any additional benefits
for aggravation of a prior condition. The cost is shared by the
insurance industry and self-insureds, funded through assessments to
insurance companies and self-insureds based on either premiums or
losses.
Self-insured retentions ....... That portion of the risk retained by a person for its own account.
Servicing carrier ............ An insurance company that provides, for a fee, various services
including policy issuance, claims adjusting and customer service for
insureds in a reinsurance pool.
Statutory accounting practices
(SAP).................. The practices and procedures prescribed or permitted by domiciliary
state insurance regulatory authorities in the United States for
recording transactions and preparing financial statements. Statutory
accounting practices generally reflect a modified going concern basis
of accounting.
Statutory surplus ............ As determined under SAP, the amount remaining after all liabilities,
including loss reserves, are subtracted from all admitted assets.
Admitted assets are assets of an insurer prescribed or permitted by
a state to be recognized on the statutory balance sheet. Statutory
surplus is also referred to as ‘‘surplus’’ or ‘‘surplus as regards
policyholders’’ for statutory accounting purposes.
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 the purchase 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 person or entity 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. 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 .......... The undistributed and unappropriated amount of statutory surplus.
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