Tag: "Insurance Company"

What are “Loss Runs”?

Every insurance carrier guards their bottom line by attempting to insure only the best risks by understanding the exposure in detail. When a prospect applies for insurance the obvious reasoning is that there is some sort of risk of loss that the prospect doesn’t want to be on the hook for. Therefore, the insurance carrier assumes risk for their insureds in turn for premium. By doing this they share the cost of risk over many.

This sharing of risk among many is usually not a problem as this is the essence of insurance. However, the problems arise when too many of the carrier’s insureds have losses within a similar frame of time. The carrier then ends up having a substantial loss that directly impacts the viability of the company.

For this reason “Loss Runs” are tracked. In essence “Loss Runs” is an insured’s insurance history at a glance. This report talks about past losses as well as open case losses. This report will state the time and the carrier along with other pertinent information. By having loss runs available an insurance company can then analyze the chance of risk with the prospective client.

Typically prospective insurance carriers will require anywhere from three to five years of Loss Runs before deciding to issue a proposal for business. Because all insurance carriers require loss runs all insurance carriers will provide loss runs as an industry standard of practice. Obviously the least amount of losses the better the insurance rates and the greater the amount of losses the higher the rates.

What this means for individuals and/or businesses alike is that it is always best to avoid or reduce risk as much as possible as a means of keeping insurance costs down. This is a direct strategy that has a direct impact on your bottom line.