Understanding the importance of loss runs is crucial for organizations looking to secure commercial insurance policies. Loss runs are comprehensive reports that provide a detailed snapshot of an organization’s claims history.
What’s Included in a Loss Run?
Typically, a loss run will contain information such as the insured’s and insurer’s names, policy number and term, date of each reported claim, description and reason for each claim, expenses paid by the insurer, and the status of each claim. If an organization has not filed any claims, the report will state that there are no reported losses available.
How Loss Runs Impact Organizations
Loss runs can impact organizations from both an underwriting and risk management perspective. An underwriter can use the report’s information to help determine the level of risk an organization presents. A loss run that contains many claims may indicate that an organization is not a good risk for an insurer to take on. On the other hand, if an organization has a relatively clean report, this could be an indicator to the insurer that the organization performs better than its peers and may be a profitable risk to write. In other words, loss runs can play an essential role in determining whether organizations are eligible for coverage and what their premiums will be.
Obtaining and Reading Loss Runs
Obtaining loss runs is a relatively straightforward process. Organizations can obtain them from their insurers by consulting their insurance professionals to make these requests. In most states, insurers are required to provide loss runs to their policyholders within 10 days of receiving requests.
When reviewing loss runs, organizations should look for any errors and let their insurers know if they find mistakes, as any undetected claims errors could go on to affect their overall coverage costs. They should assess the status of claims and monitor the status of their individual claims. In particular, organizations should focus on which claims have been closed, which are still open, how much their insurers have paid on open claims to date and how much funds have been set aside in reserves for these claims. In the case of open claims, it may be best for organizations to determine a clear course of action to help resolve them as quickly as possible. Finally, they should identify possible loss patterns by analyzing their loss runs for any patterns that could highlight the need for targeted loss control strategies and enhanced risk management protocols.
Insurance professionals are highly skilled at evaluating loss runs and can help organizations assess their reports, answer their questions and develop proper risk management tactics based on the specific findings.
Conclusion
Loss runs are a critical component of any organization’s commercial insurance policies. They provide valuable information regarding claims history, allowing organizations to minimize future losses and manage coverage expenses. By leveraging loss runs, organizations can identify primary cost drivers and gaps in their risk management programs, improve their loss runs, and keep their future insurance expenses under control.
