Travelers 2014 Annual Report Download - page 51

Table of Contents
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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
For SAP, the underwriting expense ratio 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. The underwriting expense ratio as used in this report 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 underwriting expense ratio is an indicator of the Company's efficiency in acquiring and
servicing its business.
Other companies' method of computing a similarly titled measure may not be comparable to
the Company's method of computing this ratio.
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.