Travelers 2012 Annual Report Download - page 18

Commercial Accounts sells a broad range of commercial 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 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
$193 million of fee income in 2012, 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 $82 million in fee income in 2012.
Workers’ compensation accounted for approximately 73% of sales to National Accounts customers
during 2012, based on direct written premiums and fees.
Industry-Focused Underwriting markets commercial 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 commercial 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. These 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. The Company utilizes both standard industry forms and
proprietary forms for the insurance policies it issues.
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