Travelers 2009 Annual Report Download - page 18

Each small business risk is independently evaluated via an automated underwriting platform which in
turn enables agents to quote, bind and issue a substantial amount of small business risks at their
desktop. Risks with more complex characteristics are underwritten with the assistance of Company
personnel. Select Accounts also offers its independent agents options to connect aspects of sales and
service, including agency automation capabilities and service centers that function as an extension of an
agency’s customer service operations.
Commercial Accounts sells a broad range of property and casualty insurance products through a
large network of independent agents and brokers. Commercial Accounts primarily targets mid-sized
businesses with 50 to 1,000 employees. The Company offers a full line of products to its Commercial
Accounts customers with an emphasis on guaranteed cost programs. Each account is underwritten
based on the unique risk characteristics, loss history and coverage needs of the account. The ability to
underwrite at this detailed level allows Commercial Accounts to have a broad risk appetite and a
diversified customer base.
National Accounts is comprised of three business units. The largest unit sells a variety of casualty
products and services to large companies. National Accounts clients for the most part select
loss-sensitive products in connection with a large deductible or self-insured program and, to a lesser
extent, a retrospectively rated or a guaranteed cost insurance policy. Many National Accounts
customers require insurance-related services in addition to or in lieu of pure risk coverage, primarily
for workers’ compensation and, to a lesser extent, general liability and commercial automobile
exposures. These types of services include risk management services, such as claims administration, loss
control and risk management information services, and are generally offered in connection with large
deductible or self-insured programs. These services generate fee income rather than net written
premiums. Through a network of field offices, the Company’s underwriting specialists work closely with
national and regional brokers to tailor insurance programs to meet clients’ needs. Workers’
compensation accounted for approximately 76% of sales to National Accounts customers during 2009,
based on direct written premiums and fees. National Accounts generated $186 million of fee income in
2009, excluding commercial residual market business discussed below.
National Accounts includes the Company’s Discover Re operation, which principally provides
commercial auto liability, general liability, workers’ compensation and property coverages on an
unbundled basis using third-party administrators for insureds who utilize programs such as
collateralized deductibles, captive reinsurers and self-insurance. It serves retail brokers and insureds
who utilize programs such as collateralized deductibles, captive reinsurers and self-insurance.
In addition, National Accounts includes the Company’s commercial residual market business. The
Company’s commercial residual market business sells claims and policy management services to
workers’ compensation pools throughout the United States. The Company services approximately 32%
of the total workers’ compensation assigned risk market. The Company is one of very few servicing
carriers that operate nationally. Assigned risk plan contracts, whereby the Company services other
insurance carriers’ involuntary business, generated $75 million in fee income in 2009.
Industry-Focused Underwriting markets a wide array of property and casualty products and
services tailored to targeted industry segments. Unique marketing and underwriting groups are focused
on individual industry segments of significant size and complexity that require unique underwriting,
claim, risk management or other insurance-related products and services. The following Industry-
Focused units, which are described in more detail earlier in this report, have been established:
Construction, Technology, Public Sector Services, Oil & Gas, and Agribusiness.
Target Risk Underwriting services a wide customer base with unique and specialized insurance
products and services. These specialized units have expertise in meeting customers’ specialized property
and casualty coverage requirements. These units include National Property, Inland Marine, Ocean
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