Travelers 2015 Annual Report Download - page 38

Capacity .................. The percentage of statutory capital and surplus, or the dollar
amount of exposure, that an insurer or reinsurer is willing or able
to place at risk. Capacity may apply to a single risk, a program, a
line of business or an entire book of business. Capacity may be
constrained by legal restrictions, corporate restrictions or indirect
restrictions.
Captive .................. A closely-held insurance company whose primary purpose is to
provide insurance coverage to the company’s owners or their
affiliates.
Case-incurred development
method ................. A conventional actuarial method to estimate ultimate losses for a
given cohort of claims such as an accident year/product line
component. If the paid-to-date losses are then subtracted from the
estimated ultimate losses, the result is an indication of the unpaid
losses.
The approach is the same as that described in this glossary under
the ‘‘paid loss development method,’’ but based on the growth in
cumulative case-incurred losses (i.e., the sum of claim-adjustor
incurred estimates for claims in the cohort) rather than paid losses.
The basic premise of the method is that cumulative case incurred
losses for a given cohort of claims will grow in a stable, predictable
pattern from year-to-year, based on the age of the cohort.
Case reserves .............. Claim department estimates of anticipated future payments to be
made on each specific individual reported claim.
Casualty insurance .......... Insurance which is primarily concerned with the losses caused by
injuries to third persons, i.e., not the insured, and the legal liability
imposed on the insured resulting therefrom. It includes, but is not
limited to, employers’ liability, workers’ compensation, public
liability, automobile liability, personal liability and aviation liability
insurance. It excludes certain types of losses that by law or custom
are considered as being exclusively within the scope of other types
of insurance, such as fire or marine.
Catastrophe ............... A severe loss caused by various natural events, including, among
others, hurricanes, tornadoes and other windstorms, earthquakes,
hail, wildfires, severe winter weather, floods, tsunamis, volcanic
eruptions and other naturally-occurring events, such as solar flares.
Catastrophes can also be man-made, such as terrorist attacks and
other intentionally destructive acts including those involving nuclear,
biological, chemical, radiological, cyber-attacks, explosions and
infrastructure failures. Each catastrophe has unique characteristics
and catastrophes are not predictable as to timing or amount. Their
effects are included in net and operating income and claims and
claim adjustment expense reserves upon occurrence. A catastrophe
may result in the payment of reinsurance reinstatement premiums
and assessments from various pools.
Catastrophe loss ............ Loss and directly identified loss adjustment expenses from
catastrophes.
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