Travelers 2009 Annual Report Download - page 24

These brokers and independent agencies are located throughout the United States. Bond & Financial
Products, in conjunction with the Business Insurance segment, continues to make investments in
enhanced technology utilizing internet-based applications to provide real-time interface capabilities with
its independent agencies and brokers. Bond & Financial Products builds relationships with
well-established, independent insurance agencies and brokers. In selecting new independent agencies
and brokers to distribute its products, Bond & Financial Products considers, among other attributes,
each agency’s or broker’s profitability, financial stability, staff experience and strategic fit with its
operating and marketing plans. Once an agency or broker is appointed, its ongoing performance is
closely monitored. In addition, Bond & Financial Products sells its surety products through independent
agents using a subsidiary in the United Kingdom.
The International market distributes its products principally through brokers in the domestic
markets of each of the three countries in which it operates, the United Kingdom, Canada and the
Republic of Ireland. It also writes business at Lloyd’s, where its products are distributed through
Lloyd’s wholesale and retail brokers. By virtue of Lloyd’s worldwide licenses, Financial, Professional &
International Insurance has access to international markets across the world.
Pricing and Underwriting
Financial, Professional & International Insurance has developed underwriting and pricing
methodologies that incorporate dedicated underwriting, claims, engineering, actuarial and product
development disciplines. This approach is designed to maintain high quality underwriting and pricing
discipline, based on an in-depth knowledge of the specific account, industry or country. Underwriters
use industry and proprietary data gathered and analyzed over many years to assess and evaluate risks
prior to quotation, and then use proprietary forms (for non-Lloyd’s and non-surety markets) to tailor
insurance coverage to insureds within target markets. This methodology enables Financial,
Professional & International Insurance to streamline its risk selection process and develop pricing
parameters that will preserve its underwriting integrity.
Product Lines
Fidelity and Surety provides fidelity insurance coverage, which protects an insured for loss due to
embezzlement or misappropriation of funds by an employee, and surety, which is a three-party
agreement whereby the insurer agrees to pay a third party or make complete an obligation in response
to the default, acts or omissions of an insured. Surety is generally provided for construction
performance, legal matters such as appeals, trustees in bankruptcy and probate and other performance
bonds.
General Liability provides coverage for liability exposures including bodily injury and property
damage arising from products sold and general business operations. Specialized liability policies may
also include coverage for directors’ and officers’ liability arising in their official capacities, employment
practices liability insurance, fiduciary liability for trustees and sponsors of pension, health and welfare,
and other employee benefit plans, errors and omissions insurance for employees, agents, professionals
and others arising from acts or failures to act under specified circumstances, as well as umbrella and
excess insurance.
International provides coverage through domestic operations in the United Kingdom, Canada and
the Republic of Ireland, and through the Company’s operations at Lloyd’s. The coverage provided in
those markets includes employers’ liability (similar to workers’ compensation coverage in the United
States), public and product liability (the equivalent of general liability), professional indemnity (similar
to professional liability coverage), motor (similar to automobile coverage in the United States),
property, surety, marine, aviation, personal accident and kidnap & ransom. Marine provides coverage
for ship hulls, cargoes carried, private yachts, marine-related liability, offshore energy and ports and
terminals. Aviation provides coverage for worldwide aviation risks including physical damage and
liabilities for airline, aerospace, general aviation, aviation war and space risks. Personal accident
provides financial protection in the event of death or disablement due to accidental bodily injury, while
kidnap & ransom provides financial protection against kidnap, hijack, illegal detention and extortion.
While the covered hazards may be similar to those in the U.S. market, the different legal environments
can make the product risks and coverage terms potentially very different from those in the United
States.
12