What Is a Loss Runs Report & Why Do You Need One?
Uncover the importance of a loss runs report for your business. Understand how this claims history document impacts risk and insurance decisions.
A loss runs report is a historical record of a business’s insurance claims. It provides an overview of past incidents and costs, offering insights into a company’s risk profile. Understanding this report helps business owners manage their insurance and assess operational exposures.
Defining a Loss Runs Report
A loss runs report is a document provided by an insurance carrier that summarizes a policyholder’s past insurance claims. It essentially functions as a business’s “permanent record” of every time it has utilized its insurance coverage. This report details claim activity over a specific period, typically spanning the past three to five years. It includes information on both claims that have been fully resolved and those that are still in progress. This document is generated directly by your insurance company and offers a clear picture of your claim history.
Components of a Loss Runs Report
A loss runs report contains data points that paint a comprehensive picture of a business’s claim history. It typically begins with identifying information such as the policyholder’s name or business name, along with relevant policy numbers and the effective dates of coverage. This ensures the report is clearly linked to the correct insurance policies.
For each claim, the report details the claim number, the precise date of the loss, and a brief description of the incident that led to the claim. It also specifies the type of insurance policy under which the claim was filed, such as general liability or workers’ compensation. Financial data includes the amounts paid for damages, known as indemnity, and amounts paid for associated expenses like legal or defense costs. The report also indicates the current status of each claim, whether it is open, closed, or pending. For open claims, it shows the reserves, which are funds the insurer has set aside to cover potential future costs.
Requesting a Loss Runs Report
Obtaining a loss runs report typically involves contacting your current or former insurance carrier or your insurance broker. You can initiate this request through various methods, including a direct phone call, an email, a formal written letter, or by utilizing an online portal if your insurer provides one. It is advisable to maintain a record of your request for documentation purposes.
When making the request, you will generally need to provide specific information to verify your identity. This commonly includes your business’s legal name as listed on the policy, the relevant policy number, and the specific range of years for which you require the claims history.
The timeframe for receiving a loss runs report can vary, but many states have regulations that require insurance companies to provide the requested information within 10 to 15 business days. If you experience delays, consider contacting your state’s insurance commissioner for assistance. In some instances, a signed authorization form may be required, particularly if a third party is requesting the report on your behalf.
Applications of a Loss Runs Report
A loss runs report serves multiple practical purposes for both businesses and insurance providers. For businesses, it is an important tool for understanding their own risk profile. By reviewing the frequency and severity of past claims, a business can identify operational weaknesses or areas where safety protocols need improvement, thereby informing strategies for risk mitigation and loss prevention.
Insurance carriers extensively utilize loss runs reports during the underwriting process for new policies or renewals. This report allows them to assess the potential risk associated with insuring a business, much like a credit score informs lending decisions. The claims history helps underwriters determine eligibility for coverage and calculate appropriate premiums, with a history of fewer or less severe claims often leading to more favorable rates.
The report also plays a role in due diligence during significant business transactions, such as mergers, acquisitions, or sales. Prospective buyers or investors may review the loss runs report to evaluate the target company’s historical liabilities and potential future insurance costs. This detailed claims data helps all parties involved make informed financial decisions.