Travelers 2013 Annual Report Download - page 50

Case-incurred development
method ................. A conventional actuarial method to estimate ultimate losses for a
given cohort of claims such as an accident year/product line
component. If the paid-to-date losses are then subtracted from the
estimated ultimate losses, the result is an indication of the unpaid
losses.
The approach is the same as that described in this glossary under
the ‘‘paid loss development method,’’ but based on the growth in
cumulative case-incurred losses (i.e., the sum of claim-adjustor
incurred estimates for claims in the cohort) rather than paid losses.
The basic premise of the method is that cumulative case incurred
losses for a given cohort of claims will grow in a stable, predictable
pattern from year-to-year, based on the age of the cohort.
Case reserves .............. Claim department estimates of anticipated future payments to be
made on each specific individual reported claim.
Casualty insurance .......... Insurance which is primarily concerned with the losses caused by
injuries to third persons, i.e., not the insured, and the legal liability
imposed on the insured resulting therefrom. It includes, but is not
limited to, employers’ liability, workers’ compensation, public
liability, automobile liability, personal liability and aviation liability
insurance. It excludes certain types of losses that by law or custom
are considered as being exclusively within the scope of other types
of insurance, such as fire or marine.
Catastrophe ............... A severe loss, resulting from a variety of events, including, among
others, hurricanes, tornadoes and other windstorms, earthquakes,
hail, wildfires, severe winter weather, floods, tsunamis and volcanic
eruptions. Catastrophes can also result from a terrorist attack
(including those involving nuclear, biological, chemical or
radiological events), explosions, infrastructure failures or as a
consequence of political instability. Each catastrophe has unique
characteristics and catastrophes are not predictable as to timing or
amount. Their effects are included in net and operating income and
claims and claim adjustment expense reserves upon occurrence. A
catastrophe may result in the payment of reinsurance reinstatement
premiums and assessments from various pools.
Catastrophe loss ............ Loss and directly identified loss adjustment expenses from
catastrophes, and related reinsurance reinstatement premiums.
Catastrophe reinsurance ...... A form of excess-of-loss reinsurance which, subject to a specified
limit, indemnifies the ceding company for the amount of loss in
excess of a specified retention with respect to an accumulation of
losses resulting from a catastrophic event. The actual reinsurance
document is called a ‘‘catastrophe cover.’’ These reinsurance
contracts are typically designed to cover property insurance losses
but can be written to cover casualty insurance losses such as from
workers’ compensation policies.
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