Loss Runs: Definition and How They Work in Commercial Insurance

Loss runs are formal claims history reports issued by an insurance company showing a business's paid claims, open reserves, and closed-with-no-payment claims for a specified period — typically the prior three to five policy years. Each line of a loss run represents a single claim: when it occurred, what type it was, how much has been paid, how much remains in reserve, and whether it is open or closed. Loss runs are the primary document underwriters use to evaluate a commercial insurance risk and determine whether — and at what price — to offer coverage at renewal or for a new submission. For insurance brokers, the ability to request, read, and present loss runs effectively is a core competency in commercial lines.

What a Loss Run Contains

A standard loss run report includes the following fields for each claim:

The most important figure is total incurred (paid + reserve), because the reserve represents the insurer's current estimate of future payments. Open claims with large reserves are treated as potential future losses — underwriters price them as if they will pay out fully, even if they ultimately resolve for less.

Why Loss Runs Matter to Underwriters

Loss runs are the empirical basis for risk selection and pricing. An underwriter evaluating a commercial general liability renewal uses the loss run to answer:

• Frequency: How many claims occurred over the period? A business with six claims in three years is a meaningfully different risk than one with zero, even if individual claim amounts are small.
• Severity: What is the average and maximum claim size? One large verdict has a different character than many small claims.
• Trend: Is the business improving or deteriorating? Increasing frequency or reserve development over successive years signals worsening risk.
• Open reserves: Are there large open claims with uncertain outcomes? A $500,000 open reserve is a tail-risk underwriters price conservatively.

For standard commercial accounts, underwriters typically request three to five years of loss runs across all lines of coverage being quoted. Specialty lines underwriters, particularly for excess casualty and professional liability, may request longer histories (seven to ten years) given the longer-tail nature of those claims.

Loss Runs and the Experience Modification Rate

For workers' compensation, loss runs are the direct input to the experience modification rate (EMR) calculated by the National Council on Compensation Insurance (NCCI) or the applicable state rating bureau. The EMR compares a business's actual loss history against the expected losses for businesses of its size and industry. An EMR above 1.0 means the business has worse-than-average claims history and pays a surcharge; an EMR below 1.0 produces a credit.

Loss runs for workers' comp must be requested from the carrier with sufficient lead time before the policy renewal date — typically 90 to 120 days — because NCCI uses a fixed three-year experience period (excluding the most recent policy year) to compute the mod. Errors or missing data in the loss run can cause the mod to be computed incorrectly, resulting in overpayment of premium. Brokers should review workers' comp loss runs annually and dispute incorrect reserves or closed-claim classifications when found.

How to Request Loss Runs

Loss runs must be requested directly from the insurer. In most states, the policyholder has a legal right to receive loss runs upon written request — insurers are generally required to provide them within 10 to 30 business days depending on jurisdiction.

Timing matters: underwriters for a new submission expect to receive loss runs as part of the application package. Waiting until the day of the submission deadline to request them leaves no time to dispute errors or obtain missing years.

For accounts with multiple insurers across different lines (e.g., CGL with one carrier, workers' comp with another, commercial auto with a third), loss runs must be requested separately from each carrier. A complete submission package includes loss runs for every line of coverage being replaced.

Reading Loss Runs: Common Issues

Large open reserves on closed incidents. A claim that is "closed" in status but shows a large reserve is a data integrity issue — confirm with the carrier whether the reserve is a holdback for potential reopening or an error.

Claim escalation. A workers' comp claim initially reserved at $30,000 that has grown to $250,000 over three years indicates ongoing medical treatment or litigation. The reserve trajectory matters more than the current snapshot.

Multiple claims from the same cause. Three slip-and-fall claims at the same location suggest a systemic hazard, not random bad luck. Underwriters recognize this pattern and adjust pricing or impose conditions accordingly.

Discrepancies between loss runs and the insured's claim file. Brokers and insureds should maintain their own records of reported claims. Discrepancies between carrier loss runs and internal records — a claim the insurer shows as open that the insured believes was closed — should be resolved before submission.

Related Terms

• Experience Modification Rate — the workers' comp rating factor derived directly from loss run data; EMR errors often originate in incorrect loss run entries
• Aggregate Limit — loss run total incurred figures help assess whether an insured is approaching or has previously exhausted policy aggregates
• Loss Runs as a Renewal Tool — detailed guide on how brokers request, read, and present loss runs to underwriters at renewal
• Commercial Property Underwriting — property loss runs follow the same structure; large open property claims (e.g., ongoing water damage) carry particular underwriting weight
• NCCI (National Council on Compensation Insurance) — the rating organization that aggregates workers' comp loss runs to compute experience modification rates in most states
• Reserve — the insurer's estimate of future payments on an open claim; the most subjective and scrutinized figure on a loss run

How Insurance Brokers Use Loss Runs in Practice

The most common broker mistake with loss runs is ordering them too late. A 90-day lead time for workers' comp and 60 days for casualty lines is a reasonable standard. The second most common mistake is presenting loss runs without context: a $400,000 claim that settled for $60,000 looks alarming on a loss run without the narrative. Brokers who present loss runs alongside a written claims narrative — explaining what happened, what changes the insured made, and what the ultimate resolution was — consistently receive more competitive underwriting responses than those who submit raw data without commentary.

For accounts with adverse loss history, loss runs also reveal whether the trend is improving. An insured who had four claims three years ago and zero in the last eighteen months is a fundamentally different risk story than the raw totals suggest. Constructing that narrative from the loss run data is a core part of the renewal submission process.