You may think of business insurance as an expense, but it's also an investment. Indemnity protection is important to securing a business’s financial future. Like anything else, however, you want to get the right coverage for your money. Surprisingly, there's a simple tool that can help you as you're shopping for insurance coverage for your business. Loss runs can provide critical information.
What Is a Loss Run?
Insurance loss runs are reports of the insured’s past insurance coverage and claims history. Loss run reports are analogous to consumer credit reports. When someone applies for a credit card or a loan, lenders review the applicant’s credit score to determine their eligibility and interest rate. Insurance companies review claims history to determine eligibility for coverage and the amount of premium an insured will pay for coverage. A loss run report sometimes contains data from the Comprehensive Loss Underwriting Exchange (C.L.U.E.), a Lexis-Nexis database that contains both personal and business insurance claims information.
Why Are Loss Runs Important?
Loss run reports serve one essential purpose — providing insight into a business's prospective risks based on the business’s past insurance claims history. Business owners can use these reports to understand how insurers may perceive their risk levels. While claims history may impact initial coverage decisions and premiums, it can also affect whether an insurer renews its policies for a particular insured.
Room for Improvement
A loss run report can still be useful even if an insured had recent insurance claims. A loss run report contains valuable information that can benefit a business with recent claims history if it's used wisely. A loss run report may include information on claims resulting from incidents such as:
- Workplace injuries
- Automobile accidents
- Business interruptions
- Slip-and-fall accidents
- Theft and vandalism
While insurance coverage is an important part of a business's risk management plan, steps should be taken to reduce risks at their source. A business owner can use their loss run report to analyze the claims and try to find ways to prevent similar losses in the future. Careful scrutiny may reveal issues such as gaps in employee training or a need to redesign work areas. Job workflows may need to be changed. Even return-to-work processes may offer potential areas of improvement.
A business’s loss run report may give the business owner some negotiating power. For example, the business owner may consider requesting lower premiums if there are no claims shown in loss run report. With documentation of a clean claims history, the business owner may be successful in their efforts.
While a business owner can try negotiating on their own, they may have better success if they work with an insurance broker. Knowing the business’s claims history does factor in as a strength, but a broker's expertise can help navigate potential coverage solutions and select one offering competitive prices, right level of coverage, and value.
Insurance claims reporting relies on accurate data. While most loss run reports accurately reflect claims history, some may contain incorrect information. Inaccurate claim information on a report can negatively contribute to a business's risk profile. It’s important to report and resolve such issues as soon as possible. Once the information is updated in, the loss run report reflects correct data about the business’s claims history.
What Information Is Included in a Loss Run Report?
Loss run reports may have slightly different formatting depending on which entity is providing the information. However, most loss run reports contain the same data. Each report will typically first list the insurance company's name, policy number, type of policy and policy term.
Each report will also include a valuation date. This is the last date that adjustments can be made to paid existing claims and reserve estimates, the amounts set aside to settle outstanding claims. If any claims appear in a business's loss run report, the report will also list some basic pieces of information for each claim:
- Claimant's name
- Date of loss
- Date of a reported claim
- Type of claim
- Brief description of the loss
- Total amount paid by the insurer (if the claim is closed)
- Amount of reserve funds (if the claim is open)
- Claim status
These are just elementary snapshots of each claim, but they provide important information to evaluate a business's potential risk.
How Can I Get a Loss Run Report for My Business?
Loss runs can be obtained from your broker. When you request your reports, you should include precise details for the reports you want. Specify which policies should be included, as well as how many years each report should cover. Finally, make sure you let your broker know when you need your loss runs. While each state's laws are different, most mandate that loss run reports be provided within 10 days of your request.
Need Help Finding the Right Insurance for Your Needs?
Risk mitigation is an important part of doing business. When you're seeking coverage, it is important to understand what your business’s risk level looks like to insurance companies. Working with an insurance broker gives you access to personalized insurance solutions. At Acrisure, we work with you to obtain coverage that delivers the right level of protection for your business. Contact us and request an online quote today.