A loss run report records the history of claims made against a business insurance policy. It is similar to an incident report as you might keep for management records. When looking for new business insurance coverage, you can provide the report to prospective insurers. Underwriters can use loss runs to determine how risky your company will be to insure. If there were no claims, these documents would state that there were none. Loss runs can be obtained by requesting them directly from the carrier with whom the policy was issued or by contacting the agent who sold you the policy.
When a loss run report is requested, it includes information that allows the requester to see specific data about the claims that were made. The document is fairly straightforward and shouldn’t contain any surprises for your business.
A loss run report will include:
Obtaining your loss run record might be a difficult process. You could find that it is difficult to determine the contact you should request it from or where to send the request. This shouldn’t be the case. If you’re in need of the record, you should be able to simply request it from your insurer. If you have a difficult time, or if you find that your insurer is dragging its feet, you might want to consider researching new providers.
If this seems equally as daunting, consider an online quoting tool as a starting step. You might find that not only can you receive your workers’ compensation insurance from a more reliable company, but you can save money as well.
Back to the actual requesting of the information. Once you get in contact with your insurer, let them know what you need. This includes the policies you need the report run on as well as the length of time. You might want the report to simply cover the last year, or you may need it for a longer amount of time. Also, let them know when you need the reports.
There may be a form you need to fill out requesting the documentation. Complete this quickly, so there’s no delay in getting your information. In some scenarios, you may need to produce a letter of request, called a Loss Run Request letter or a Letter of Authorization. Businesses are required by law to send you the information in ten days or less.
Inevitably, you will want to assess whether you are getting the best insurance deal. It’s one of the first cost-cutting measures you may take. When this happens, the underwriters will request the loss run record.
Suppose your record has little to no claims, your business is seen as a good bet in the eyes of risk management. This may help you get a better price on your insurance.
Potential insurers will look at your record to assess the number of claims you’ve had in a certain time period, as well as how much money was paid out for those claims. They may inquire about your safety measures and return to work policies, as both of these can have an impact on your paid claims.
They will also look at the frequency and location of your prior claims to help understand if there is a pattern or evaluate whether steps have been taken to remedy problem issues within your business.
How can you use the report to your advantage? Other than it helping you possibly save money on your insurance, you can use it in the same ways the insurance company does. This means looking at your report and noticing the trends. Do you have claims that all seem to happen in one area of your business? If so, what have you done to alleviate issues in that sector?
You also want to ensure that the information provided in the report is accurate. Do not assume the report tells the whole story or has the most up-to-date information. You might even find that something on the report doesn’t belong to you. Mistakes happen. If your company has multiple locations, this is more common than you might think.
It’s also important to take a look at your reserves. Reserves are the amount of money that is currently set aside for any ongoing claims. It is calculated by estimating the likely medical, indemnity, and other costs of each occupational injury or disease. Insurance companies make every effort to calculate the expected costs of a claim as precisely as possible. However, the reserve amount may be higher or lower than what is ultimately paid out.
After you’ve assessed your loss run report, it’s time to make a plan. Are things going well, and there’s no need for improvement? Or are there areas where you might be able to make some changes?
Earlier, we discussed recognizing a pattern. If you see this, what can you do to make changes? Do you have high-risk employees or work areas? Perhaps there is one particular part of your factory that sees more falls than another. What can you do to decrease the incidents? You might need slip-proof matting or to require slip-proof shoes in that area.
Do you have a safety committee? Consider creating one if you don’t. This group of managers and employees can explore safety issues and make plans for improvement. The creation of this team lets your employees and potential insurers know that safety is a top priority for you.
As you can see, loss run reports are more than just a tool used by insurance agencies and underwriters. You can use them to your advantage as well. Create a goal for improvement, and they may even end up saving you money.
Mordechai Kamenetsky, co-founder and lead agent of Kickstand, is recognized as an expert in workers' compensation. He is passionate about helping small businesses manage risks and lower their workers' comp costs. In his articles, he educates readers and clients on the intricacies of workers' comp insurance.