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If you’re shopping for insurance for your business, it’s likely you’ll be asked to provide loss runs from your current or prior insurer. These documents detail your business’s insurance claims history and help insurers better understand your business’s risk profile.
What is an insurance loss run?
A loss run is a report that documents your business’s insurance claims history. Often called “loss run reports” or “insurance loss runs,” these documents provide insurers with a clear picture of your business’s prior insurance claims, whether they are open or closed, and the financial impact of these claims.
Loss runs are often described as being similar to a credit score in the consumer financial world. When you are applying for a mortgage, credit card, or loan, financial institutions will take a look at your credit score to better understand your credit risk, which may determine whether you are approved for a loan or credit card, in addition to how much you might pay in interest rates.
For loss runs, insurers will analyze these reports to understand how risky it would be to insure your business. This risk assessment will directly influence whether or not an insurer will provide your business with coverage, in addition to how much you might pay in premiums.
Loss runs are often necessary in the insurance application process. If you are switching insurers, you’ll likely need to provide potential insurers with loss runs from the last few years. If you were covered by different insurers, you’ll need to request a loss run from each company.
What information is included in a loss run?
A loss run contains details of your business’s claims history with an insurer. The following information is typically included in a loss run:
- Insurance company
- Insured business name
- Policy number
- Policy term
- Reporting period
- Claim number
- Date of reported claim
- Date of loss
- Date claim was closed
- Type of claim
- Reason for claim
- Current status of claim
- Total amount paid for claim (if closed)
- Total amount incurred for claim (if open)
It’s important to note that loss runs are provided by and specific to your insurer, so if you’ve previously been covered under multiple insurers, you’ll need to request a loss run from each insurer in order to get a complete claims history.
Why do I need a loss run report?
Loss run reports are most commonly used when you are applying for insurance through a new provider. As a part of the application process, an insurer will ask you to provide loss run reports. Depending on the insurer and type of coverage you are applying for, they may ask you for loss runs over the last two to five years.
The insurer uses these loss runs as part of the underwriting process to determine your business’s risk profile. If your loss run shows a history of frequent or high-cost claims, an insurer may deem your business of higher risk, leading to higher premiums. On the other hand, if your loss run is relatively light, showing few or infrequent claims, an insurer may offer your business lower premiums or discounts.
Loss runs are also used in the renewal process, even if you are renewing with the same provider, as insurers often need the most up-to-date claims information on your business. Given that many policies are written on an occurrence basis, a new claim could have been filed against your business for a loss that occurred while you were covered by a previous insurer. This new information may impact your renewal rates.
A loss run report may also be beneficial for a business to review from time to time. Understanding your claims history may help you identify opportunities for improvement in your overall risk management strategy. For instance, if your loss run report shows frequent workplace injury claims at a specific business location, this may indicate a need to investigate the saftey protocols you have in place at that location.
How do I read a loss run report?
All loss run reports generally follow the same format. Each claim in your history will be listed on its own line, along with a description of the claim, date, status, and amount paid or on reserve. When reviewing your loss run reports, pay particular attention to the following:
- Accuracy. Does your loss run report reflect an accurate history of your claims? Any errors on your loss run report could directly impact the premium you pay. Make sure to check the accuracy of your loss run and inform your insurer if you see any mistakes.
- Frequency of claims. It may be helpful to examine any trends that appear in your claims history. If a particular type of claim appears frequently or if claims tend to happen during a particular time of year, it may indicate an issue with your business’s safety measures, employee training, or operating procedures.
How do I get an insurance loss run?
Loss runs are provided by your insurer. You can request loss runs through your agent, broker, or directly with the carrier. Some insurers will require you to make the request in writing, while others have made the process of requesting loss runs extremely easy through simply filling out an online form.
Turnaround time for a loss run request varies by insurer. While some companies may be responsive and deliver your report within a few hours, others may be much slower, which can end up inconveniencing you, especially as you are shopping for a new insurer. This has historically been an issue in the insurance industry—so much so that some states now require insurers to provide loss runs within a certain number of days.
Loss runs are a common reporting tool used by insurers to evaluate a business’s risk profile. These documents map out your business’s claims history and provide insurers with a better understanding of how risky your business is to insure, ultimately impacting your premium pricing. Loss runs can be requested through your insurer and are often required when applying for insurance through a new provider.