Loss Runs, Rating
Data and Other Data
Often Requested by Underwriters
Let's start with Loss Runs.
Most underwriters will tell you that one of the most important
single document that they use in determining whether or not to
accept coverage for you business is your loss history. But you
have a need to see this data also. It is a valuable tool for
you to use in figuring out what is going on in your operations from
a safety standpoint. It is available to you for every type of
insurance your business has.
A good loss run provided you by your insurance company tells you
when an event happened that resulted in a claim, what happened to
cause that claim, which of your personnel caused the accident, the
name of the person or organization pursuing the claim against you,
and the actual cost of closed claims and the insurance adjusters
estimate of the value of open claims (the reserve value), and if a
law suit has been filed, the estimated cost of the legal defense of
the claim. The record may be organized historically (claims
sorted by date of occurrence), and allows you categorize summaries
of loss causes, operational locations producing claims, and types of
claims. This data permits you to identify problem areas in
your operations, and develop plans to improve the safety of your
operations in those areas.
This data belongs to you, and you should insist that your broker
or agent obtain it for you on a regular basis. For very small
companies, you should probably look at loss runs at least once a
policy term - probably at a time about 3 months before the
expiration date of your policy. For larger firms, you should
receive them every six months. The largest firms should ask
for them at least every quarter.
If you plan to remarket your policy, it is vital that you obtain
loss runs displaying consecutive years of coverage for at least the
five most recent years of your business activity. For some
classes of business - most of professional liability -- the
underwriter may want up to ten years of loss runs. Of course,
if you have been in business for a lesser period of time, you should
obtain loss runs for the period of time you have been in business.
Next is the topic of Rating Data.
If your firm is big enough to have developed an experience
modification, you as an insured are entitled to receive a copy of
the "Rating Data" used to calculate that experience modification.
The principal reason for getting and reviewing this data is
important is to be able to review both the premium and the loss
information used in developing the modifier.
You should expect your agent or broker verify the accuracy of the
data, and to be able to explain to you the effect of the data on
your modifier. Even with the improvement in electronic data
processing over the years, it is surprising how often a good broker
reviewing this material on your behalf may catch errors that affect
the modifier.
Other underwriting data.
The principal forms of other underwriting data that may impact
the cost and acceptability of your coverage are the results of
independent investigations obtained by the underwriter as a part of
the risk evaluation process. These investigations include
examination of your operations by Safety Engineers or Claims
Professionals , either employed by the insurance company or
independent contractors selling these services to the underwriter.
They may also include independent evaluations of your financial
resources and background, utilizing credit report or Dun &
Bradstreet reports. Other reports of independent
investigations may also be required by various underwriters to
enable them to assess more accurately the risk you are transferring
to them by buying their policy.
If you have questions about this kind of information gathering as
applied to your business and your business insurance, just ask me
and I will be happy to help you.