Travelers 2011 Annual Report Download - page 18

Commercial Accounts sells a broad range of property and casualty insurance products through a
large network of independent agents and brokers, primarily targeting 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 sells a variety of casualty products and services to large companies through a
network of national and regional brokers, primarily utilizing 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. National Accounts also provides property and casualty products and services
through retail brokers on an unbundled basis, using third-party administrators for insureds who utilize
programs such as collateralized deductibles, captive reinsurers and self-insurance. National Accounts
provides insurance-related services, such as risk management services, claims administration, loss
control and risk management information services, either in addition to, or in lieu of, pure risk
coverage, and generated $195 million of fee income in 2011, excluding commercial residual market
business. The commercial residual market business of National Accounts sells claims and policy
management services to workers’ compensation pools throughout the United States, and generated
$61 million in fee income in 2011.
Workers’ compensation accounted for approximately 73% of sales to National Accounts customers
during 2011, based on direct written premiums and fees.
Industry-Focused Underwriting markets property and casualty insurance products and services
through a large network of agents and brokers. These products and services are tailored to targeted
industry segments of significant size and complexity that require unique underwriting, claim, risk
management or other insurance-related products and services.
Target Risk Underwriting markets property and casualty insurance products and services through a
large network of agents and brokers to a wide customer base having specialized property and casualty
coverage requirements.
Specialized Distribution distributes admitted and excess and surplus lines property and casualty
products predominantly through selected wholesale agents, both on a brokerage and managing general
underwriting basis, and through selected program agents. Brokers, general agents and program agents
operate in certain markets that are not typically served by the Company’s appointed retail agents, or
they maintain certain affinity arrangements in specialized market segments. The wholesale excess and
surplus lines market, which is characterized by the absence of rate and form regulation, allows for more
flexibility to write certain classes of business. In working with wholesale or program agents on a
brokerage basis, Specialized Distribution underwrites the business and sets the premium level. In
working with wholesale or program agents on a managing general underwriting or program manager
basis, the agents produce and underwrite business subject to underwriting guidelines that have been
specifically designed for each facility or program.
Pricing and Underwriting
Business Insurance has developed an underwriting and pricing methodology that incorporates
underwriting, claims, engineering, actuarial and product development disciplines for particular
industries, and enables Business Insurance to facilitate its risk selection process and develop pricing
parameters. This approach is designed to maintain high-quality underwriting and pricing discipline
utilizing proprietary data gathered and analyzed with respect to business over many years. The
underwriters and engineers use this information, which provides specialized knowledge about specific
industry segments, to assess and evaluate risks prior to quotation.
6