A Loss Run Report (LRR) is a comprehensive summary of a business’s claims history, provided directly by its insurance carrier. This document serves as a formal record of every claim filed under commercial policies over a specified time frame. The LRR functions as a historical transcript, detailing all past incidents that have resulted in a financial payout or reserve allocation.
Defining the Loss Run Report
A Loss Run Report provides a formal, policy-by-policy accounting of all claims activity. It is typically requested to cover the experience period of the last three to five years, though some applications may require ten years of history for a complete picture. The report is generated directly by the insurance company or its Third-Party Administrator (TPA) that held the coverage. This document is a mandatory requirement for any new insurance application or policy renewal, serving as the most objective measure of a company’s risk profile. It provides a detailed chronological ledger of incidents that have impacted the insurer’s financial exposure under policies such as General Liability, Workers’ Compensation, and Commercial Auto.
Essential Data Found in a Loss Run
Each line item on a Loss Run Report represents an individual claim and contains several standardized data fields that quantify the incident. A unique Claim Number identifies the event for tracking and referencing purposes. The Date of Loss specifies when the incident occurred, linking the claim to the policy period in force. The Type of Loss field provides a concise description of the cause, such as a slip and fall, property damage, or vehicle collision.
A designation of the claim Status indicates whether the file is Open, signifying ongoing activity and potential future payments, or Closed, meaning all payments have been finalized. Two financial figures are presented. The Amount Paid to Date shows the total dollar amount the carrier has disbursed for medical bills, legal fees, or indemnity payments up to the report date. The Current Reserve Amount is the money the carrier has set aside to cover anticipated future expenses needed to bring the open claim to a final resolution.
Why Loss Runs Are Critical for Insurance Underwriting
The Loss Run Report is the primary document used by underwriters to assess the financial viability of providing coverage to a business. Underwriters analyze the frequency and severity of past claims to project future losses, which directly informs their risk assessment models. A history showing numerous large claims suggests a higher probability of future payouts, leading the underwriter to adjust pricing upward.
The data within the LRR is translated into the final premium calculation and the terms of coverage offered. If an underwriter sees a pattern of high-severity losses, they may mandate higher deductibles or self-insured retentions, shifting more financial responsibility onto the policyholder. If loss history is poor, the business may be deemed uninsurable in the standard market, forcing them into more expensive, non-admitted markets.
For Workers’ Compensation insurance, the report is used to calculate the Experience Modification Rate (E-Mod). This rate compares a company’s actual historical losses to the expected losses of similar businesses in the same industry. An E-Mod greater than 1.0 results in a premium surcharge, making the coverage significantly more expensive.
The Process of Obtaining Your Loss Run
A business seeking its Loss Run Report must direct the request to the current or former insurance agent or directly to the carrier that issued the policy. The most time-sensitive request should be made at least 90 days before the policy renewal date to ensure the data is available for marketing and negotiation. Insurance regulations require carriers to provide this report to the insured promptly upon written request, as the data belongs to the policyholder. While the turnaround time can vary, a request for a standard three-to-five-year history should typically be fulfilled within ten to fifteen business days.
Analyzing and Interpreting Loss Run Data
Interpreting the Loss Run Report requires identifying underlying risk trends that affect future insurability. Analysis distinguishes between claim frequency and claim severity. A high frequency of small claims suggests systemic issues with safety protocols or training, while a few high-severity claims indicate a potential for catastrophic loss events.
The status of claims must be closely examined, particularly the presence of open claims and the corresponding Current Reserve Amounts. High reserves on open files signal significant uncertainty and represent potential future expenditures that have not yet materialized. Negotiating with the carrier to reduce excessive reserves on older, unresolved claims can sometimes improve the perceived risk profile before a renewal.
Businesses should look for specific patterns in the Type of Loss data to pinpoint areas requiring immediate risk mitigation strategies. For example, a predominance of claims related to back injuries or property damage suggests a need to overhaul manual handling procedures or maintenance schedules. Addressing these claim drivers before the underwriter reviews the file allows the business to proactively present a plan for risk improvement, potentially leading to better coverage terms.