What Are Loss Runs in Insurance and How to Get Them

Insurance serves as a protective measure, safeguarding individuals and businesses from financial losses arising from unforeseen events. For commercial entities, understanding their claims history is paramount in managing risk and securing appropriate coverage. This is where “loss runs” emerge as a fundamental document within the commercial insurance landscape. Loss runs provide a comprehensive record of a company’s past insurance claims, serving as an objective overview of its risk profile. They are a tool for both businesses and insurance providers, establishing a factual basis for assessing future insurance needs and costs.

Understanding Loss Runs

Loss runs summarize an insured entity’s historical claims data spanning a specified period, typically the past three to five years. These reports are generated by insurance carriers, providing a detailed account of every claim filed under a policy during that timeframe. The primary purpose of a loss run is to offer a transparent, factual record of an organization’s claims experience, without analytical interpretation or subjective assessment.

These documents are important for businesses and potential new insurers. For a business, a loss run offers a clear picture of its past incidents, aiding in identifying trends and areas for risk improvement. For insurers, it provides the data to accurately assess the risk associated with underwriting a new policy or renewing an existing one. The information contained within a loss run is purely a factual representation of reported claims, including those closed without payment or denied.

The consistent format and content across different carriers make loss runs a standardized tool in the commercial insurance industry. They allow for direct comparison of claims history, essential for accurate risk evaluation. Businesses frequently request these reports when seeking new insurance quotes or renewing existing policies, as they are a core component of the underwriting process.

Key Information Included in Loss Runs

A loss run report typically provides a detailed breakdown of each claim. One primary data point is the policy period, indicating the timeframe covered by the policy. Each claim is assigned a unique claim number for precise identification and tracking.

The report also specifies the date of loss, the exact date when the incident occurred. A brief description of the loss event details the nature of the incident, such as property damage, a liability claim, or a workers’ compensation injury.

Financial details are a component of loss runs, including amounts paid, often called incurred losses. This figure represents the total amount the carrier has paid out for a specific claim to date. Loss runs also detail reserves, amounts set aside by the insurer for future payments on open claims, encompassing potential medical costs, legal fees, or indemnity payments. The report indicates the current status of each claim, classifying it as open, closed, or potentially reopened.

Acquiring Loss Runs

Obtaining loss runs is a straightforward process, initiated by the policyholder or their authorized representative. The most direct method is to contact the current carrier directly, as they are the custodians of claims data. It is also common to request reports from previous carriers, especially when seeking coverage history beyond the current policy term. A broker or agent can also facilitate the request.

When making a request, provide specific information to ensure reports are generated. This includes policy numbers and date ranges required. Providing this detail helps the carrier or broker retrieve the relevant information.

The timeline for receiving loss runs varies, but most carriers provide reports within a few business days to two weeks. Some carriers may offer digital access through online portals for quicker retrieval, while others send reports via email or postal mail. While core information in loss runs is standardized, the exact format may differ slightly between carriers, though all contain essential data points.

How Loss Runs are Used

Once obtained, loss runs serve multiple applications for both insurance providers and businesses. Insurers rely on loss runs for underwriting new policies, as these reports provide an objective measure of a prospective client’s past risk performance.

Historical claims data helps underwriters assess the likelihood of future claims and determines the appropriate risk classification for the business. This assessment directly influences premium calculation, with frequent or severe claims often leading to higher costs.

Insurers also utilize loss runs when making renewal decisions for existing policies. By reviewing the most recent loss runs, they can evaluate whether the policyholder’s risk profile has changed and adjust coverage terms or premiums accordingly.

Businesses leverage loss runs for strategic purposes. Analyzing data helps them understand their risk profile, identifying areas where losses frequently occur or where claims are costly. This insight allows businesses to implement targeted loss prevention strategies, such as enhancing safety protocols or investing in risk mitigation technologies, to reduce future incidents.

Loss runs are important in budgeting for insurance costs, providing a clear historical basis for predicting future premium expenses. When comparing insurance quotes, businesses use loss runs to ensure each prospective insurer evaluates their risk based on the same factual claims history, allowing for an apples-to-apples comparison of proposed coverages and prices.