Insurance 101
What are the major lines of business for PI & BI?
PI: Auto, Home
BI: Renters, commercial auto, workers comp, property, general liability, CMP
Where should your current focus be?
Drive profitable growth and accuracy
What do we use credit scores for?
How do we make money?
Underwriting profit, net investment income, fee income
What is prior approval filing?
Before rates are to be used, they must first be approved by the insurance dept
What is adverse selection?
Situation where parties lacking relevant knowledge to make decisions, suffer adverse effects due to asymmetric information within a market
What is a project managers role?
Driving profitable growth
What is a filing?
Filing is a document submitted to a dept of Insurance (DOI) that provides detailed information on insurance rates we propose to use for a specific product.
Commissions, taxes, licenses & fees, general & acquisition
What is BIs business units vision and strategy?
Vision: Become a global leader in protecting business customers from risk by
Strategies: offering a competitive cost structure, convenient processes, customer solutions
What is first party coverage, and what does it cover?
Protects against losses sustained by the insured person or business
It covers: dwelling, business personal property, collision, comprehensive
What is combined ratio?
Measure of:
Profitability; sum of incurred losses& expenses/ earned premium
Describe soft and hard markets and what types of events can cause them
Hard: financial market is weaker, less competition in the insurance industry. May seek to improve profitability by tightening our underwriting standards
Example: Gas prices decrease= driving increases, more accidents
Soft: Financial market is strong, heavy competition in the insurance industry. May seek to grow by loosening our underwriting standards
Example: Gas prices increase= driving decreases, fewer accidents
How can we improve our underwriting profit or “margin”?
Limit expenses, raise the rate, avoiding adverse selection
What is file and use in regards to filing?
The rates are filed and then can be used without an explicit approval from the insurance dept. However, if the dept, in reviewing the filing, finds elements that they have questions on they can hold up the effective date of the rates.
Name some key business partners
Underwriting, product management, finance, actuarial, tech, operations
What is written policies (PI) or written premium (BI)?
Combination of new business & retained, measured in policy counts in PI and $ for BI
How do you calculate growth in PI?
Includes RBC: Written/Base-1
Excluding RBC: Retention%/NBB-1
What is travelers target rate of return?
15% OVER TIME
What is PIs business units vision and strategy?
Vision: deliver value in the eyes of the customer. Be the undeniable voice for the customer and indispensable partner for our distributers by delivering solutions that are sophisticated AND simple
Strategies: Provide proudly competitive offerings by balancing segmentation with customer and distributor experience
What is 3rd party coverage, and what does it cover?
Protects insured against losses they cause to a 3rd party
Covers: Bodily injury, property damage, personal & advertising injury
What is retention?
Ratio of what we kept/retained compared to the total written last year, measured in policy counts in PI & in $ for BI- influenced by renewal premium change (RPC)
How do you calculate growth in small commercial and BI?
How do we measure profitability?
Direct combined ratio= (direct losses & ALAE + expenses)/ earned premium
Control combined ratio= (controllable losses & ALAE) + expenses/ earned premium
For filing, what is use and file?
One can use the new rates and then file them. Although rare, there can be times when the insurance dept may order a company to cease and desist from using the new rates even though some customers may have already paid them.