What Is an Insurance Loss Run and Why Do You Need One?

Insurance documentation helps manage financial risk and understand an entity’s exposure. Businesses and individuals rely on various records to gain insight into their coverage and claims history. The insurance loss run is a key report, providing a detailed account of past claims for policyholders and insurers. It is a fundamental record for comprehending an entity’s historical risk performance.

Understanding Insurance Loss Runs

An insurance loss run serves as a historical record detailing all claims filed under a specific insurance policy over a defined period. It provides a comprehensive overview of an entity’s claims activity, reflecting both the frequency and severity of past incidents. It offers insights into an insured’s risk profile from an underwriter’s perspective. The primary purpose of a loss run is to consolidate claim-related financial data and incident descriptions.

This document typically includes several key pieces of information for each reported incident. It lists the policy period(s) covered, showing the timeframe for which claims are reported. Each claim has a unique claim number, date of loss, and a description of the event. The status of each claim, whether it is open, closed, or reserved, provides insight into its current standing.

Financial details show amounts paid out on claims to date. It also indicates amounts reserved for open claims, representing the insurer’s estimated future payments for unresolved incidents. Deductibles applied to each claim are noted, showing the portion of the loss borne by the insured. The combination of paid amounts and reserved amounts results in the “incurred losses,” offering a complete financial picture of the claim’s impact.

The Importance of Loss Runs

Loss runs hold significant value for both policyholders and insurance carriers, influencing various financial and operational decisions. Insurance companies rely on these reports during the underwriting process for policy renewals. A clean loss run, with few or low-cost claims, can lead to more favorable premium rates and terms for the upcoming policy period. This suggests a lower risk exposure for the insurer.

Policyholders, particularly businesses, utilize loss runs as a powerful tool for risk management. Analyzing patterns in claims data helps organizations identify recurring incidents and specific areas with higher risk concentrations. This detailed insight enables the development of targeted strategies, such as enhanced safety protocols or employee training programs, to prevent future occurrences and mitigate potential financial liabilities. Proactive management of identified risks can lead to a reduction in future claim costs.

Loss runs also provide valuable data during financial due diligence processes, such as mergers or acquisitions. These reports offer buyers or investors a clear picture of a company’s historical risk profile and potential liabilities from past incidents. Understanding a target company’s claims history can influence the valuation and terms of a transaction. The transparency offered by a loss run helps in making informed financial decisions.

Requesting Your Loss Run

Obtaining an insurance loss run involves contacting your insurance representative or the carrier directly. Your insurance broker is often the primary contact point. The insurance carrier’s customer service or claims department can also initiate the process. Specifying the reason, such as for a renewal quote, can streamline the procedure.

When requesting the document, you provide identifying information. This includes your policy number, policy type, and the period for the loss history. Most insurers provide loss runs covering the past three to five years, a standard timeframe. The document is delivered in a standardized format, such as a PDF or Excel spreadsheet.

The timeline for receiving a loss run varies, from a few business days to two weeks. This depends on the carrier’s internal processes and the complexity of your claims history. Businesses request loss runs annually, usually 60 to 90 days before their policy renewal date. This allows time for review and submission to new carriers.

Analyzing Your Loss Run Data

Upon receiving your loss run, review the data for accuracy and insights. Verify all details, including claim numbers, dates of loss, and incident nature. Address any discrepancies in claim status, paid amounts, or reserved amounts with your broker or carrier. Accurate data is important as incorrect information can affect future premiums.

Analysis involves examining claim frequency and severity. Understanding if your organization experiences many small claims or a few large claims guides risk mitigation strategies. High frequency might indicate a need for operational adjustments, while high severity could point to systemic vulnerabilities. Pay attention to open versus closed claims, as open claims often carry reserves that impact incurred loss figures and future premium calculations.

Investigate large individual claims for their financial impact. Look for patterns and trends across all claims, such as recurring incident types or locations with higher activity. This process helps understand underlying operational risks. It can inform strategic adjustments to improve safety, reduce future claims, and influence insurance costs.