Travelers 2010 Annual Report Download - page 28

The Company also may choose to write business it might not otherwise write for strategic purposes,
such as improving access to other underwriting opportunities.
Independent agents either utilize one of the Company’s automated quote and issue systems or they
submit applications to the Company’s service centers for underwriting review, quote, and issuance.
Automated transactions are edited by the Company’s systems and issued if they conform to established
guidelines. Exceptions are reviewed by underwriters in the Company’s business centers. Audits are
conducted by an internal peer review team across all of the Company’s independent agency generated
business on a systematic sampling basis. Each agent is assigned to a specific employee or team of
employees responsible for working with the agent on business plan development, marketing, and overall
growth and profitability. The Company uses agency level management information to analyze and
understand results and to identify issues and opportunities.
The Personal Insurance products sold through additional marketing channels utilize the same
issuance systems discussed previously, and any exceptions are also underwritten by the Company’s
employees. Business derived through these channels is marketed by external personnel, who work with
Company management on business plan development, marketing and overall growth and profitability.
Channel-specific production and claim information is used to analyze results and identify problems and
opportunities.
Product Lines
The primary coverages in Personal Insurance are personal automobile and homeowners insurance
sold to individuals. Personal Insurance had approximately 7.7 million active policies
(e.g., policies-in-force) at December 31, 2010.
Personal Automobile provides coverage for liability to others for both bodily injury and property
damage and for physical damage to an insured’s own vehicle from collision and various other perils. In
addition, many states require policies to provide first-party personal injury protection, frequently
referred to as no-fault coverage.
Homeowners and Other provides protection against losses to dwellings and contents from a wide
variety of perils (excluding flooding) as well as coverage for personal liability. The Company writes
homeowners insurance for dwellings, condominiums and rental property contents. The Company also
writes coverage for boats and yachts, personal articles such as jewelry, and umbrella liability protection.
Net Retention Policy
The following discussion reflects the Company’s retention policy with respect to the Personal
Insurance segment as of January 1, 2011. The Company generally retains its primary personal auto
exposures in their entirety. For personal property insurance, there is a $7.0 million maximum retention
per risk. Personal Insurance retains the first $10.0 million of umbrella policies and purchases facultative
reinsurance for limits over $10.0 million. The Company utilizes facultative reinsurance to provide
additional limits capacity or to reduce retentions on an individual risk basis. The Company may also
retain amounts greater than those described herein based upon the individual characteristics of the risk.
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