Travelers 2013 Annual Report Download - page 60

Underwriting .............. The insurer’s or reinsurer’s process of reviewing applications for
insurance coverage, and the decision as to whether to accept all or
part of the coverage and determination of the applicable premiums;
also refers to the acceptance of that coverage.
Underwriting expense ratio
(SAP and GAAP) ......... For SAP, it is the ratio of underwriting expenses incurred (including
commissions paid), less certain administrative services fee income
and billing and policy fees, to net written premiums as defined in
the statutory financial statements required by insurance regulators.
For GAAP, it is the ratio of underwriting expenses (including the
amortization of deferred acquisition costs), less certain
administrative services fee income and billing and policy fees, to net
earned premiums.
The GAAP underwriting expense ratio as used in this Annual
Report on Form 10-K is an indicator of the Company’ s efficiency
in acquiring and servicing its business.
Underwriting gain or loss ..... Net earned premiums and fee income less claims and claim
adjustment expenses and insurance-related expenses.
Unearned premium .......... The portion of premiums written that is allocable to the unexpired
portion of the policy term.
Voluntary market ........... The market in which a person seeking insurance obtains coverage
without the assistance of residual market mechanisms.
Wholesale broker ........... An independent or exclusive agent that represents both admitted
and nonadmitted insurers in market areas, which include standard,
non-standard, specialty and excess and surplus lines of insurance.
The wholesaler does not deal directly with the insurance consumer.
The wholesaler deals with the retail agent or broker.
Workers’ compensation ....... A system (established under state and federal laws) under which
employers provide insurance for benefit payments to their
employees for work-related injuries, deaths and diseases, regardless
of fault.
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