What Is a Loss Run and Why Do You Need One?

A loss run report is a detailed record of an insured’s claims history with an insurance carrier. It provides a comprehensive overview of past insurance claims, similar to a credit score for financial reliability. Insurers use loss runs to understand a policyholder’s past claim activity, which is key to assessing future risk.

Key Information on a Loss Run

A loss run report lists claims filed by a policyholder, typically covering the past three to five years. Each entry details the claim number, loss date, and report date. It also identifies the claim type, such as property damage, general liability, or workers’ compensation, along with a brief incident description.

Financial information includes the total amount paid by the insurer for each claim and any reserves for open claims. The report indicates the current status of each claim (open, closed, or subrogated). It also includes identifying information like the company name, policy number, insurance company name, and policy term. A valuation date signifies when the data was generated; insurers often require this date to be current, typically within 30 to 90 days of an application.

Why Loss Runs are Used

Insurance companies primarily use loss runs during the underwriting process to assess the risk associated with new or renewal policies. A history of few or no claims can demonstrate a lower risk profile, potentially leading to more favorable rates and terms for coverage. Conversely, a report showing frequent or severe claims may result in higher premiums or even difficulty in securing coverage. Insurers analyze the frequency and severity of past losses to predict future claim potential.

Policyholders also gain valuable insights from their loss runs. They use the reports to review claims history, identify areas for risk improvement, and verify accuracy. This helps pinpoint patterns or trends indicating operational weaknesses, informing adjustments to risk management strategies and safety protocols. A favorable loss history can also help negotiate better insurance rates.

Loss runs are additionally used in business transactions, such as mergers and acquisitions, to conduct due diligence. Acquiring entities request loss runs, sometimes going back five to ten years for larger firms, to evaluate a target company’s past liabilities and potential future insurance costs. These reports can reveal insights into potential litigation or quality control issues that could impact the transaction.

Obtaining Your Loss Run

Policyholders can request their loss run report directly from their current or previous insurance carrier, or through their insurance agent or broker. Requests can be submitted via phone, email, formal letter, or through online portals offered by some insurance providers.

When requesting, provide specific details like the business name, policy number, and desired timeframe, often the most recent three to five years. Many states require insurers to provide these reports within a specific timeframe, typically ten days or less. Maintain a record of your request. If the report is not provided within the mandated period, contact your state’s insurance commissioner. Always review the report carefully for accuracy upon receipt.