The loss run report from your insurer details the many times your company has filed claims. Each claim made on a company’s insurance policy will be reflected in a loss runs report. If you’re in the market for new small business insurance, this report may be helpful. The insurance loss run report can be used by prospective insurance providers to assess the risk involved in insuring you. Read on to get to know more about how to get it and where to get it. Enjoy the ride!
What Is a Loss Run?
Your company’s claims record is known as a “loss run” in the insurance industry. When looking for new insurance, you can take these with you and present them in a report to potential providers. Loss runs are used by insurance companies in the same way that credit ratings are used by financial institutions to determine whether or not to extend credit. Upon receiving your loss runs, an insurer is able to investigate:
- The nature of your prior claims filings
- The monetary repercussions of your claims (compensation amounts).
- Your history of making claims
Insurers use this information to decide if you present an acceptable risk (and hence a lucrative customer) or a high risk (and thus an unprofitable customer). They may increase your rate or decide not to insure your company altogether based on their findings.
What Is Loss Run Report?
In the insurance industry, an insurance loss run report serves a similar purpose to credit scores. Just like a bank will check your company’s credit history before lending money, an insurer will examine past claims to determine risk. This report will also be a reflection of the efficiency with which the company is run and managed. It’s also impossible to prevent claims like those involving lightning damage to a building. However, multiple water damage losses due to, say, a leaking roof, may point to a lackadaisical approach to upkeep. The insurance provider needs to know that you’re serious about reducing possible risk, and loss runs are a great way to demonstrate that to them.
Loss runs can highlight the level of risk underwriters could face if they insure your firm, much like credit scores can indicate whether or not it is prudent for banks to extend credit to your company. The report gives you and potential insurers a clear picture of your expertise and risk. Insurance providers will assess the frequency and severity of your losses by reading your loss runs reports. This is essential during the underwriting phase.
The magnitude of a loss may indicate a systemic threat to your company or an isolated event. However, underwriters may take a closer look at your maintenance schedule, business methods, and manufacturing process if you have a history of frequent claims. Therefore, it is always necessary to provide an explanation of the loss activity so that the underwriter can avoid drawing assumptions.
What Information is Included in a Loss Run Report?
Your company’s loss run report will simply read “no losses reported” if it has never submitted a claim. If not, you should expect the following details to be included in your loss run report:
- Company name
- Policy number
- Policy Duration
- Date of the loss valuation report
- Claims filing date
- Date of initial claim filing
- Describe the incident (the basis for your claim).
- Policy or insurance claim type.
- The sum that the insurer has so far spent on litigation and defense fees
- Sum total of insurance company payments for damages, medical bills, and settlements.
- The sum an insurer has saved up in anticipation of potential losses.
- Whether or not the claim is open at this time
An essential part of any report is its valuation date, which provides assurance that the data is up-to-date and reliable. Since a lot can change in the claims process over the course of six months, underwriters tend to disregard data older than that. A loss run report can be requested for virtually any sort of commercial insurance (general liability, D&O, commercial property, E&O, etc.) and by businesses of any size and in any industry.
How Do You Get a Loss Run Report?
A loss run report can be obtained by simply requesting it from your insurer or insurance broker. If they are considering leaving their existing insurance, policyholders may be reluctant to pose the question. But you shouldn’t worry about it. In the insurance industry, submitting a loss run report is standard procedure.
When you finally get in touch with your insurance company, you’ll need to give them the following information:
- Indicate which insurance plans’ loss histories you’re interested in reviewing.
- For what time period are reports needed
- Your deadline for receiving the reports
Most jurisdictions have laws requiring insurance providers to provide you with the requested information within 10 days. You can file a formal complaint with the State Insurance Department if you believe your insurer is deliberately delaying or avoiding delivering you the reports, or if they fail to do so within the legally mandated time frame.
Why Would Your Business Need a Loss Run Report?
Naturally, insurers are interested in your claim history in order to gauge the level of risk presented by your business. On the other hand, you may utilize a loss analysis to identify potential risks in your business operations and develop strategies to address them. While loss runs are typically thought of as a resource for insurance companies, they can also be used by businesses to identify areas for improvement within their own processes. The underwriter’s stance could be swayed if the business can show that it took corrective action to prevent losses.
Evidence of a lack of claims can also be used to negotiate cheaper premiums when you shop around for better insurance. The procedure is very similar to that of purchasing auto insurance, where one’s likelihood of receiving a premium discount increases in proportion to the quality of one’s driving record.
Using a Loss Run Report to Improve Workplace Safety
Reports typically detail all claims activity during the policy period, including the insured’s name and policy number, the date of each claim or loss, the date the claim was reported to the carrier, a description of the injury, any payouts to the insured, claims reserves, and the status of the claim (open, paid, or closed). They also show the locations of the most frequently reported injuries. This information is useful for every business owner, especially those who are trying to examine their safety measures and keep their insurance prices in check.
The Loss Run report will include information that can be used by business owners to assess workplace safety trends and pinpoint problem areas. Small business owners have identified an issue that can be fixed through improved training, better hiring, or better working conditions if injuries occur consistently in the same places, areas, departments, or jobs.
The reports will list the number, severity, circumstances, and bodily areas injured. With this data, business owners may watch for problems, take precautions, and reevaluate their safety measures to reduce the likelihood of future injuries. In conclusion, business leaders can utilize the report as a roadmap to target improvement areas in terms of safety.
Using a Loss Run Report to Inform Business Practices
The following are ways to use a loss run report to inform business practices:
#1. Accuracy
The information in the Loss Run report should be double-checked by any small business owner. Claim information should include the claimant’s name, the nature of the accident or illness, the amount of money set aside for the claim, a brief description of the loss, and a notation of whether or not the claim is still active or has been litigated. The report should be detailed enough for the business owner to identify each claim and injured worker.
One of the factors that can affect future premiums is the Experience Modification Rate (also known as EMR, XMod, Ex-Mod, or MOD), which takes into account the frequency and severity of claims. That cost could go up if we find out that you provided false information or made up a claim. If a mistake or something unusual is spotted in the report, business owners should get in touch with their insurance company or agent.
#2. Lost-Time
The amount of “lost-time” claims, or compensation provided to injured workers while they are out of work, should be tracked and compared to the total number of claims by small business owners. The necessity for a review of a company’s return-to-work policy and process may become apparent if the percentage of lost-time claims is significantly higher than the national average of 20% to 25% of total claims.
#3. Litigation
The number of claims that went to court should also be noted. Workers who file a lot of lawsuits may have trust issues with their employer, be anxious about losing their jobs, be dissatisfied with their work, or be unhappy with the care they get from their doctors. That should alert the business owner to the need to improve communication and the risk of high turnover, which can have negative effects on the bottom line.
#4. Open Claims
The Loss Run report details the number of active claims for a specified time frame, including the date of injury, the date it was reported to the employer, the date it was notified to the insurer, and the date it was entered into the insurer’s system. The expense of a claim increases the longer it is pending. Claim resolution is a priority for small business owners when an injury has been reported. Owners can keep track of open claims and strive to have them settled more promptly by frequently reviewing a Loss Run report.
#5. Individuals
The repetition of allegations by the same individuals is another possible trend to look for. Employers and brokers can use this data to plan for a safer workplace and fewer claims in the future. Workers should be taught to notify their supervisors of any injuries either right away or before the end of the workday.
#6. Reserves
The reserves section of the report is an equally important reading for the owners of small businesses. The reserve amount for a claim is the sum the insurer has set aside to meet its financial commitments in the event of a claim. It is determined by tallying up the estimated costs associated with treating each illness or injury. Insurance companies make every effort to precisely estimate the expenses that will result from a claim. However, the actual payout may be more or less than the reserve amount.
Where to Get a Loss Run Report
Have you been thinking about where to get a loss run report? Simply request a loss run report from your account manager, agency, or insurer. Include the time frame in which you need access to the claims records and the number of years for which you are requesting them.
How Long Does It Take To Get a Loss Run Report?
Your insurance company’s turnaround time for the report could be a day, multiple days, or a week. If you take more than 10 days to provide the requested loss runs, you may be in violation of insurance laws in your state.
When Would You Need a Loss Run Report?
Loss runs are useful for gauging a company’s commitment to safety if many of its personnel are engaged in hazardous activities. However, a loss run report is typically required when searching for a new insurance provider. When you inquire for an estimate on insurance, the company will typically ask for three to five years of loss run history before deciding whether or not to insure you and, if so, at what price.
Your company may be eligible for sizeable premium reductions if loss records show that it rarely encounters or causes property damage or bodily harm. This is analogous to the discounts given to cautious drivers by their automobile insurance companies. Try other avenues to find reasonably priced medical coverage.
How Do I Create a Loss Run Report?
Your insurance company is the one that generates the loss run report. Just let your insurance agent or broker know that you’d need a loss run, and they’ll get in touch with your provider on your behalf.
How Do I Read a Loss Run Report?
- Double-check the loss involved.
- Identify potential for third-party recovery.
- Look for trends.
- Examine profits.
- Re-evaluate safety concerns.
Final Thoughts
A business’s insurance claims history can be summarized in a Loss Run report, which details the types of claims filed, the frequency with which they were filed, and the total amount of money spent on those claims. Insurance companies consult this information while determining a company’s risk level. A company’s insurance rate will vary depending on the projected risk. The premium increases in proportion to the level of risk. Insurers also use risk assessments to make decisions about new policies and policy renewals.
Since a company’s claim history might have an effect on its insurance premiums, it’s important for business owners to check the Loss Run report every year to make sure it’s up-to-date and accurate.
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