It’s true — higher insurance premiums for businesses often feel like just another part of the deal. But loss runs may offer a silver lining. Essentially, loss runs are key to understanding your claims history. These reports break down the claims paid out versus the premiums you’ve paid over a certain period. They give you (and potential insurers) a detailed snapshot of where your business stands in terms of risk and claims history. It’s a great way to see where you might have room to improve and maybe even lower your premiums down the line.
As a small business owner, I knew it was important to get a feel for loss runs and understand how they helped me find the most competitive rates for business insurance. Let’s take a quick look at loss runs, including how to evaluate them and how they might help you control fixed costs.
Loss runs can be viewed as detailed accountings that document your claims payouts, if any. A typical report might have information about past claims, such as incurred dates and paid dates, amounts paid out, and whether the specific claims are in an open or closed status. Insurance companies use loss runs to assess your level of risk1 and the premium that will be attached to that determination.
I see loss run data as really useful from two angles. First, it helps me spot potential trouble areas in my operations that could lead to claims. Then, it gives me a chance to address those spots — whether that’s improving workplace safety or fine-tuning how we handle things administratively. On the insurer’s side, the loss history tells a clear story of risk. And that’s a concept insurers (and I) want to have a handle on at all times.
How to Get Loss Runs
It’s easy to obtain loss runs. I request them through my agent or, in some cases, directly from the carrier. At the ready, l have things like policy numbers and the time frame I want the report to cover. There may be additional criteria you can add to customize the request.
Most processes are digitized these days, but it’s also possible that the carrier uses regular mail to provide loss runs. In either case, make certain that agency contact info such as email and physical addresses are accurate — especially if it’s been a while since you exchanged information with your insurer. If it’s been more than two weeks since your request, reach back out to the broker or carrier.
Interpreting Loss Runs
It might seem like there’s a lot to digest in the pages containing loss runs. But if you break it down piece by piece, the info becomes clearer with experience. You’ll see dates and amounts as we’ve mentioned. You may also see what’s known as your loss ratio2. This is the amount of claims paid out by the carrier divided by the premium they’ve received from you, with lower numbers being more favorable.
Loss runs might suggest some aspect of your business may need some attention. If physical losses repetitively result from plumbing systems, for instance, it may point to the need for repairs or upgrades.
Benefits of Using Loss Runs
Insurers, with that in mind, like nothing more than a sparkling loss history. Responsible, efficient management helps in this category. And those positive attributes reflected in loss data can land some beneficial rates and policy discounts.
Dollars saved on insurance premiums can be invested in areas meant to grow revenue — like sales and marketing. By cutting fixed costs like business insurance premiums and funneling those dollars into growth, that strategy can create a healthier bottom line.
How to Use Loss Runs to Save on Insurance
Don’t wait to review loss runs. Look at them frequently so you have your finger on the pulse of the business and perhaps a few of its shortcomings. Regular reviews allow you to implement some preventive measures before an accident or injury occurs.
Along with carriers, you can tap the knowledge of a broker to help you leverage loss runs. They can go to bat for you when it’s time to tackle your policy renewal — especially when those runs look good. Get your hands on these reports at least annually and before you decide to shop around for carriers. Staying ahead of the curve puts you in a great position to have some control over the premiums you pay.
Make the Most of Your Loss Runs
Using loss runs to your business’s advantage should be part of a grand plan to help reduce insurance costs and elevate your risk profile. These valuable pieces of data give you deeper insight into areas you might not have explored yet.
You can pull those runs at any time, so no time like the present if you’re looking for ways to grow your operations. By educating yourself and tapping the knowledge of an agent, you can better control costs, operations and profit. And that is the name of the game in business.
- https://www.irmi.com/term/insurance-definitions/risk-profile ↩︎
- https://www.investopedia.com/terms/l/loss-ratio.asp#:~:text=What%20Is%20a%20Loss%20Ratio,divided%20by%20total%20earned%20premiums. ↩︎