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Insurance Loss Runs – Why They’re Needed to Get a Quote

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insurance loss runs

Insurance Loss Runs

If you’ve ever shopped for business insurance, you may have been asked for a copy of your loss runs and didn’t know what they were. 

Simply put, an insurance loss run is your company’s loss or claim history and, in many cases, when you look for new business insurance the agents and brokers, you’re speaking to will ask for a copy of that claim information for the last three to five years.

 

Why is this needed in many cases?

Well, a business with several claims in their recent history probably shouldn’t pay the same amount for insurance as a similar business with no claims, right?  Pricing for business insurance is based on a number of factors, and claim history plays a big part in that pricing equation, so underwriters which may be quoting your account want to know what type of claims you’ve had in the past and how much was paid out so they can build in appropriate buffers into their pricing models if needed to cover anticipated claims in the future. 

Or they may just decline you a quote outright if claims history is bad. 

How do you get insurance loss runs?

That’s always a bit of a sticky problem because you can ask your current broker for them, or you can ask your insurance company for them, but just know as soon as a loss run request is made of an insurance company, they notify your current broker. 

This of course starts the cycle of phone calls and hurt feelings and an overall disruptive mess that most of us would like to avoid.  It’s rife with subtle confrontation and defensiveness. 

How do you avoid that? 

Good question. 

In my opinion, you shouldn’t go out to market for quotes unless you’re dissatisfied with your current broker relationship, or unless you feel like you’ve outgrown them. Because when it comes time to ask for your insurance loss runs there’s a whole lot of splaining to do like Ricky Ricardo used to say to his wife Lucy. 

All kidding aside, and I’ve spoken about this in past videos, there is a limited number of insurers in the market writing business insurance.  If you’re working with a good broker – meaning they are active in the business insurance market, they can probably access all the same or most of the same insurers that any other agent or broker can access, so if your desire to go to the market is based on testing the pricing or your account, then do that with your current broker.

If you, like I just mentioned, feel like you’ve out-gown your broker or aren’t happy with that relationship or service, then when it comes time for loss runs be upfront about it and call your account manager and tell them that you need your loss history because you’re thinking of making a change. 

Something else you should tell them is to please not submit your account to any other insurance companies.  In some cases, if the conversation turns heated, you’ll need to be blunt and say that you are not authorizing them to re-market your account to other insurers. 

The reason this is important is that if you’ve mentally decided it’s time for a change, you don’t want your current broker going out to the marketplace and mucking things up for you.   

Why? 

Because when underwriters from the various insurance companies out there get multiple quote requests or submissions on your account on top of the one from the new broker you’re working with, they will cool to the idea of giving you a competitive quote. 

It’s human nature, if you show the marketplace that you’re out shopping around then most interested underwriters will lose interest and think – oh, this account is only out for the lowest price and doesn’t care about everything else. 

Here’s the bottom line.  If you’re a business owner you may get dozens of calls every year when your insurance is going to renew in about 3 months. Those brokers calling you are trying to get their foot in the door to quote your insurance and they may promise lower rates, better coverage, or both, and it may sound appealing. 

But, before you invite brokers in to start the quoting process you’ve got to think strategically about the outcomes you’re trying to achieve, and that sticky problem of getting loss runs is going to happen early in the process. 

If you’re not really looking to change relationships then the whole shopping process may be a big pain in the ass and just end up being disruptive and time-consuming, so think this through.  Having an open and honest conversation with your existing broker may make a lot more sense than inviting in competition. 

I hope that explains what loss runs are, why they are needed, but more importantly, I hope this gave you some strategic thinking advice that’s helpful.  If you need further guidance on this subject or would like to speak to me further about your business insurance, why not reach out.  Click the button below to get started!  Thanks.

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