Our industry

Marine insurance: Early forms of modern marine policies existed in the Italian city states of Genoa and Palermo in the 13th century. In 1719, it was calculated that the City of London's overseas commitments in marine risks amounted to several million pounds a year. Until 1824 no other English companies were permitted to write marine insurance. This allowed individual underwriters to expand rapidly, having adopted the name of Lloyd's of London from the coffee house of Edward Lloyd.

Fire insurance: Municipal or state-funded fire insurance originated in Germany in 1623, but the first fire insurance companies were established in England. Around 1681, the Fire Office was established in London by Dr. Nicholas Barbon. The early British fire insurance companies restricted their business to London and initially to buildings, only extending to include contents around 1708 and to accept business outside London from 1710.

Life assurance: Life assurance as a corporate business did not really develop until 1699. Early societies insured a limited number of people, charging the same premium for each member and fixing them within a narrow age range, typically between 12 and 45. In 1762, James Dodson developed a scientific selection rating that based premiums on age and life expectancy, allowing all types of lives to be insured.

Insurance has become tightly linked to the success, efficiency and growth of the global economy, primarily because insurance makes it possible for individuals, entrepreneurs and large commercial businesses to remove certain risks. Whether it's the risk of fire, the risk of damage to transported goods or the risk of natural disasters, all these incidents will have a financial impact on the business. The owners of the business will want to protect themselves against the financial consequences of chance events through insurance. The business can transfer the risk away from themselves to an insurance company. In essence, insurance is the pooling of risk, ensuring that the losses of the few are paid for by the premiums of the many.

If the policy is short term, ranging from 1-3 years, then it is known as General Insurance. The policyholder generally pays the premium annually. General Insurance is divided into Commercial insurance and Personal Lines insurance. Commercial Insurance is a contract to protect business, (buildings and contents) against fire, weather, theft, vandalism, lawsuits and accidents. Personal Lines is a contract for individuals and families; common products are home, auto and health.

If the policy is long term, then it is known as Life insurance (or life assurance), where the insurer pays a beneficiary a sum of money (the "benefits") upon the death of the insured person, the policyholder. The policyholder pays a premium, either regularly or as a lump sum. In addition to paying a lump sum after a death, other forms of life contracts can provide investment potential by growing the capital over time either by investing regular or single premiums.

Although insurance has many jobs found in any industry (e.g., Finance, IT, Human Resources, and Marketing), there are several careers that are unique to insurance.

Claims adjusters: check to see whether a claim is covered by a customer’s policy, make an estimate of payment, and can investigate the circumstances of a claim.

Underwriters: investigate potential business opportunities and decide whether insurance will be provided, what premium the customer will pay and the terms of the policy.

Actuaries: do statistical forecasting and risk management. Their responsibilities include pricing insurance products, reserving, or determining how much the company will need to pay for future liabilities.

Insurance Agents: are employed by an insurance company to sell insurance policies on the company's behalf.

Insurance Brokers: work for the buyer by providing advice and arranging the best possible insurance coverage. They do not work for the insurance company.

A variety of financial measures and other indicators are used in the industry to understand performance. As a Zurich employee, you will often hear these terms in meetings to describe how we’re doing. The following are a few of those indicators. **

Let’s start with income

Gross Written Premium: Gross Written Premium (GWP) is the total premium dollars written by Zurich before we apply reinsurance, which transfers a portion of our risk - and of the premium - to other insurance companies. There are other forms of income, such as fees charged for our risk engineering and claims handling services.

Investment income: Another source of income is our investments - returns we get from investing in things like bonds, stocks and loans. Globally, the Group invests assets to work for us.

Once we have the income, where does it go?

Loss Ratio: We are in the business of delivering for our customers in their time of need by paying claims when they suffer an insured loss. Our Loss Ratio is the percentage of premium that we pay out in claims.

We can influence our Loss Ratio in two ways: first, by selecting our markets carefully, where we have expertise and where we believe we can make a profit, and ensuring we get the right price for every risk every time through our underwriting rigor and second, by paying the right amount for each and every claim.

Expense Ratio: Our expense ratio, in simple terms, is the cost of running our business as a percentage of our premium income. Included are employee salaries and benefits, the cost of running our offices, commissions to brokers and travel costs.

So that's money in and money out - what's the result?

Combined Ratio: Our Combined Ratio adds our losses and expenses to provide a benchmark as to how we are performing financially. A percentage less than 100 means we are making an underwriting profit and a percentage over 100 means we're making an underwriting loss.

And finally the bottom line.

Business Operating Profit (BOP): When all income is accounted for, and all outgoings, including claims and expenses, are paid, what we're left with is our Business Operating Profit, or BOP. This is the "bottom line" - the profit or loss we have made in a given period, excluding income tax expenses and some other adjustments like restructuring expenses.

**Global Life and Farmers have additional financial indicators that are specific to their segments.