Travelers 2015 Annual Report Download - page 48

Underlying underwriting
expense ratio ............. The underlying underwriting expense ratio is the underwriting
expense ratio adjusted to exclude the impact of catastrophes.
Underlying underwriting margin Net earned premiums and fee income less claims and claim
adjustment expenses (excluding catastrophe losses and prior year
reserve development) and insurance-related expenses.
Underwriter ............... An employee of an insurance company who examines, accepts or
rejects risks and classifies accepted risks in order to charge an
appropriate premium for each accepted risk. The underwriter is
expected to select business that will produce an average risk of loss
no greater than that anticipated for the class of business.
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.
48