Travelers 2014 Annual Report Download - page 44

Table of Contents
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Fidelity and surety programs
Fidelity insurance coverage protects an insured for loss due to embezzlement or
misappropriation of funds by an employee. Surety is a three
- party agreement in which the
insurer agrees to pay a third party or make complete an obligation in response to the default,
acts or omissions of an insured.
Gross written premiums
The direct and assumed contractually determined amounts charged to the policyholders for
the effective period of the contract based on the terms and conditions of the insurance
contract.
Ground - up analysis
A method to estimate ultimate claim costs for a given cohort of claims such as an accident
year/product line component. It involves analyzing the exposure and claim activity at an
individual insured level and then through the use of deterministic or stochastic scenarios
and/or simulations, estimating the ultimate losses for those insureds. The total losses for the
cohort are then the sum of the losses for each individual insured.
In practice, the method is sometimes simplified by performing the individual insured analysis
only for the larger insureds, with the costs for the smaller insureds estimated via sampling
approaches (extrapolated to the rest of the smaller insured population) or aggregate
approaches (using assumptions consistent with the ground
- up larger insured analysis).
Guaranteed cost products
An insurance policy where the premiums charged will not be adjusted for actual loss
experience during the covered period.
Guaranty fund
A state - regulated mechanism that is financed by assessing insurers doing business in those
states. Should insolvencies occur, these funds are available to meet some or all of the
insolvent insurer's obligations to policyholders.
Holding company liquidity
Total cash, short - term invested assets and other readily marketable securities held by the
holding company.
Incurred but not reported (IBNR) reserves
Reserves for estimated losses and LAE that have been incurred but not yet reported to the
insurer. This includes amounts for unreported claims, development on known cases, and re
-
opened claims.
Inland marine
A broad type of insurance generally covering articles that may be transported from one
place to another, as well as bridges, tunnels and other instrumentalities of transportation. It
includes goods in transit, generally other than transoceanic, and may include policies for
movable objects such as personal effects, personal property, jewelry, furs, fine art and
others.
IRIS ratios
Financial ratios calculated by the NAIC to assist state insurance departments in monitoring
the financial condition of insurance companies.