Finding success in your industry means evaluating your company regularly for areas of vulnerability. It’s only natural to depend on specific tools to tighten up exposures and decrease risk. That said, loss run reports are an excellent resource to have when you’re trying to level up. Plus, many insurance carriers require these reports before offering a quote.
In this post, we explore the details surrounding loss run reports and how they can ensure your professional momentum. More than a mere piece of paper or special requirement to land a great premium, loss run reports are an essential tool. And that’s just for starters.
What Is a Loss Run Report?
As the leader of a thriving company, you’ve likely outgrown your insurance carrier once or twice. Perhaps you needed specific coverage, or you wanted a better premium. So you joined the insurance hunt. However, before receiving a quote, you were likely asked to submit a loss run report for the past five years.
While this procedure is only standard, it helps to ease the process when you know what kind of information you’re handing over. A loss run report is an official review of your company’s past claims history, including details regarding each incident, such as:
- What kind of claim you filed (under what policy)
- The settlement cost
- How often you filed claims
Some people compare a loss run report to a credit report since it shows all the claims you’ve filed under specific insurance policies. Keep in mind, though, that there’s no official score assigned. Taking everyone to dinner to celebrate an 800+ credit score, for example, isn’t on the docket when it comes to loss run reports.
However, your company will often bode well when it hasn’t experienced any losses for an extended time frame. In other words, fewer losses typically mean better premiums. These calculations only make sense, too, because carriers use a loss run report to determine how risky your business is to insure. As imagined, a carrier will base your premium on your level of risk.
What Information Does a Loss Run Report Include?
Instead of a simplified overview, a loss run report shows the entire picture of how your company has used its insurance policies. The information typically weaved into a professional storyline on a loss run includes:
- Name of insured (usually the company name)
- Policy number
- Claim date (when the loss occurred)
- Reported date (when you reported the loss)
- Explanation of the loss (the reason for the claim)
- Settlement amount (financial impact of the claim)
- Claim status (e.g., unresolved, open, closed)
- Carrier reserves for a particular incident (how much insurance set aside per claim)
Loss run reports paint a reasonably detailed picture of your business. And for a good reason, too. Although carriers use these reports to evaluate your company’s risk level, that’s not the only purpose they have.
When Do You Need Loss Run Reports?
Most small to mid-market companies can benefit from the information included in loss run reports for several reasons—in addition to merely impacting the bottom line.
Shopping for New Insurance
As mentioned, your company may have outgrown your current carrier, so you’re shopping around. When you’re scaling up professional rungs at a rapid pace, you need adequate coverage to protect your assets. If your current carrier isn’t meeting your needs, it only makes sense to find someone who does.
Many business owners assume that requesting a loss run report is a dead giveaway that you’re shopping for a better deal. And sometimes that’s precisely the case. Other times, you have bigger plans for your loss run report.
Improving Workplace Safety
Aside from landing a better deal or more coverage, loss run reports can help you assess the gaps in your standard procedures. By examining the claims you have filed in the past several years, you get a clear picture of any “weak links” you may be facing.
For example, loss run reports can clue you in on the most frequently claimed injuries or incidents. Armed with this information, a business owner can evaluate workplace safety programs and make any necessary changes.
Not only do loss run reports highlight trends and vulnerabilities in a particular department, but they offer the chance to fill in the gaps. Many companies regularly request a loss run report to benchmark their workplace safety improvements.
Informing Business Practices
Along those same lines, loss run reports can influence everyday business practices to improve efficiency and workplace happiness, and client satisfaction.
For example, as mentioned, there’s no score assigned to a loss run report. In terms of a workers’ comp policy, however, companies are assigned an experience modification rate (EMR) or otherwise known as XMod, Ex-Mod, or MOD. This figure will impact your premium as well as communicate accuracy—it’s like reviewing your credit report.
Some other areas to watch for, include:
- How many lost-time claims were filed?
- What number of claims were litigated?
- Are there claims that are currently open?
- Is there an individual continually involved in claims?
- How much are the insurance reserves?
For What Policies Can a Carrier Generate a Loss Run Report?
Insurance carriers provide loss run reports for most types of commercial insurance policies, including:
- Business owner’s policy
- General liability insurance
- Commercial property insurance
- Workers’ compensation insurance
- Commercial auto insurance
This list isn’t exhaustive, of course, but it gives you an idea of the vast amounts of information on a loss run report.
How Do You Get a Loss Run Report?
Fortunately, attaining a loss run report is as easy as requesting it from your account manager or insurance agent. You can also contact your carrier directly to inform them you need a loss run report. Carriers have different delivery methods—hard copy via mail or electronic copy—but the reports are generally cost-free.
Be sure to specify the time frame you want reviewing and give them a deadline for getting the information. It’s not uncommon for an insurance carrier to get the information to you in a day. Though sometimes it takes a little longer—a week or so— for your request to process.
Many state regulations dictate that a carrier must fulfill a loss run report request within ten days. So, you won’t usually be waiting for ages to receive this information. What’s more; is that a loss run report must be currently valued, which means the information was generated within the past 30 days. Carriers want up-to-date information to assess the risk appropriately, after all.
Keep in mind that since a potential carrier will request loss run reports covering 3-5 years back, you’ll need to contact every carrier who’s insured you during that period. Though most carriers are quick on the draw when it comes to loss run reports, give them ample time, so you don’t have to start the entire “shopping” process over.
Understanding the details of what coverage your company needs can be a confusing process. Founder Shield specializes in knowing the risks your industry faces to make sure you have adequate protection. Feel free to reach out to us, and we’ll walk you through the process of finding the right policy for you.
Want to know more about commercial umbrella insurance? Talk to us! You can contact us at email@example.com or create an account here to get started on a quote.