Travelers 2014 Annual Report Download - page 151

Table of Contents
In general, developments on single large claims (both adverse and favorable) are a primary source of changes in reserve estimates for this
product line.
The Company's change in reserve estimate for this product line was –
36% for 2014, – 21% for 2013 and –8% for 2012. The 2014 change reflected
better than expected loss experience in the contract surety product line for accident years 2012 and prior. The 2013 change reflected better than
expected loss experience in the contract surety product line for accident years 2010 and prior. The 2012 change reflected better than expected loss
experience in the contract surety product line for accident years 2008 and prior.
Personal Automobile
Personal automobile includes both short and long tail coverages. The payments that are made quickly typically pertain to auto physical
damage (property) claims and property damage (liability) claims. The payments that take longer to finalize and are more difficult to estimate relate to
bodily injury claims. Reporting lags are relatively short and the claim settlement process for personal automobile liability generally is the least
complex of the liability products. It is generally viewed as a high frequency, low to moderate severity product line. Overall, the claim liabilities for
this line create a moderate estimation risk.
Personal automobile reserves are typically analyzed in five components: bodily injury liability, property damage liability, no
- fault losses,
collision claims and comprehensive claims. These last two components have minimum reserve risk and fast payouts and, accordingly, separate
factors are not presented.
Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required personal automobile reserves
(beyond those included in the general reserve discussion section) include:
Bodily injury and property damage liability risk factors
•
Trends in jury awards
•
Changes in the underlying court system and its philosophy
•
Changes in case law
•
Litigation trends
•
Frequency of claims with payment capped by policy limits
•
Change in average severity of accidents, or proportion of severe accidents
•
Subrogation opportunities
•
Degree of patient responsiveness to treatment
•
Changes in claim handling philosophies
No
- fault risk factors (for selected states and time periods)
•
Effectiveness of no - fault laws
•
Frequency of visits to health providers
•
Number of medical procedures given during visits to health providers
•
Types of health providers used
•
Types of medical treatments received
150