A Loss Run Report is a historical summary of insurance claims filed against commercial policies, acting as a performance record for a business’s risk profile. This document is a standard requirement in the commercial insurance industry, providing a transparent view of past incidents. It is the primary tool used by carriers to evaluate a policyholder’s experience and potential future exposure. Understanding this report is important for businesses seeking new coverage or managing the cost of their current insurance program.
What Exactly Is a Loss Run Report?
A loss run report is an official document generated by an insurance carrier or a third-party administrator (TPA) that details all claims activity associated with a specific policy. The report typically covers the last three to five years, though businesses may request a longer duration.
This report is frequently requested when a company is seeking competitive quotes from new insurers or preparing for policy renewal. It is also a fundamental component of due diligence during a merger, acquisition, or internal operational risk assessment. The document provides a snapshot of the claims as of a specific valuation date, which is important because claim financial information can change over time.
Essential Information Included in a Loss Run
The report presents a chronological, claim-by-claim breakdown of all reported incidents. Each entry includes identifying information, such as the claim number, the policy number, the date of loss, and the date the claim was formally reported to the insurance company.
A descriptive field offers a brief narrative of the incident, explaining the reason for the claim (e.g., property damage or employee injury). The report also categorizes the loss by the insurance line, clarifying whether it falls under general liability, workers’ compensation, commercial auto, or another policy type. This establishes the context for the financial data presented later.
Why Insurers Depend on Loss Runs for Underwriting
Underwriters rely on loss runs as the foundation for calculating a business’s exposure and determining appropriate premium rates. By analyzing the historical data, they assess the likelihood and potential cost of future claims, which directly influences the price of coverage offered. The data allows insurers to identify patterns in claims, evaluating both the frequency of incidents and the severity of the financial outcomes.
A high frequency of small claims may signal systemic issues in safety protocols or maintenance practices, indicating a higher probability of future losses. Conversely, a history of one or two large, severe claims might be treated as outliers, though they still represent a significant risk. This analysis enables the underwriter to set a rate that accurately reflects the demonstrated risk and determines whether the policyholder faces higher premiums or modified coverage terms upon renewal.
Interpreting Key Claim Statuses and Financial Metrics
The financial metrics within the report are grouped into three primary figures that define the total financial impact of each claim. Paid Losses represent the money the carrier has already disbursed for a claim, covering settlements, medical bills, or legal defense costs. Reserves are the amounts of money the carrier has set aside to cover anticipated future payments for unresolved claims.
Incurred Losses represent the total financial obligation for a claim, calculated as the sum of Paid Losses plus Reserves. Policyholders must also understand the status of each claim: “Open,” “Closed with Payment,” or “Closed without Payment.” An open status means the claim is still active and potentially accumulating more costs. The incurred loss figure may also be adjusted to account for Incurred But Not Reported (IBNR) claims, which are losses that have occurred but have not yet been formally filed.
How Policyholders Request and Use Loss Runs
Policyholders have the right to request a copy of their loss run report directly from their insurance carrier or through their broker. The request should specify the policy numbers and the exact years of claims history needed, typically covering the last five years. Many state regulations mandate that insurance companies must provide this report within a specific timeframe, often within 10 business days of the request.
Once received, the report serves as a powerful tool for the business to analyze its own risk profile and manage insurance negotiations. Companies should review the document meticulously for any inaccuracies, such as incorrect dates, descriptions, or claims that were not actually filed. Identifying and correcting errors before presenting the report to a prospective insurer can directly influence the final premium and coverage terms.