Travelers 2014 Annual Report Download - page 45

Table of Contents
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Large deductible policy
An insurance policy where the customer assumes at least $25,000 or more of each loss.
Typically, the insurer is responsible for paying the entire loss under those policies and then
seeks reimbursement from the insured for the deductible amount.
Lloyd's
An insurance marketplace based in London, England, where brokers, representing clients
with insurable risks, deal with Lloyd's underwriters, who represent investors. The investors
are grouped together into syndicates that provide capital to insure the risks.
Loss
An occurrence that is the basis for submission and/or payment of a claim. Losses may be
covered, limited or excluded from coverage, depending on the terms of the policy.
Loss adjustment expenses (LAE)
The expenses of settling claims, including legal and other fees and the portion of general
expenses allocated to claim settlement costs.
Loss and LAE ratio
For SAP, the loss and LAE ratio is the ratio of incurred losses and loss adjustment expenses
less certain administrative services fee income to net earned premiums as defined in the
statutory financial statements required by insurance regulators. The loss and LAE ratio as
used in this report is calculated in the same manner as the SAP ratio.
The loss and LAE ratio is an indicator of the Company's underwriting discipline and
underwriting profitability.
Other companies' method of computing a similarly titled measure may not be comparable to
the Company's method of computing this ratio.
Loss reserves
Liabilities established by insurers and reinsurers to reflect the estimated cost of claims
incurred that the insurer or reinsurer will ultimately be required to pay in respect of insurance
or reinsurance it has written. Reserves are established for losses and for LAE, and consist of
case reserves and IBNR reserves. As the term is used in this document, "loss reserves" is
meant to include reserves for both losses and LAE.
Loss reserve development
The increase or decrease in incurred claims and claim adjustment expenses as a result of the
re
- estimation of claims and claim adjustment expense reserves at successive valuation dates
for a given group of claims. Loss reserve development may be related to prior year or current
year development.
Losses incurred
The total losses sustained by an insurance company under a policy or policies, whether paid
or unpaid. Incurred losses include a provision for IBNR.