This article is one of a series of tips to help business
owners save large amounts of money on business insurance.
Today, we are going to talk about loss runs, which are
vitally important to any buyer of business insurance, who
wants to save money. They are also known as policy history
reports, but are more commonly called loss runs. This
information applies to all forms of business insurance,
including contractors general liability insurance.
What are loss runs? A loss run is simply a report from an
insurance company showing claims you had for a particular
policy. It should show the policy number, effective dates,
and list for each claim a claim number, amount paid, amount
reserved, amount incurred. It should show premium paid for
the policy also.
Why are they important? Failure to obtain them at the
right times is a primary cause for overpaying large sums of
money. No one will accurately quote your business
insurance without currently valued loss runs.
Why is getting loss runs often difficult? Brokers know
their clients cannot get competitive quotations without
them. To avoid unwelcome competition, they rarely give
them to clients voluntarily. Brokers often try do delay
handing over loss runs to clients, and use the time to
capture as much control of your renewal as possible. To
further complicate matters, brokers often cannot access
loss runs for policies you purchased from other brokers.
The critical job of capturing currently valued loss runs 90
days in advance of your renewal routinely gets mishandled.
This ends up costing you money and creating unnecessary
emergencies as your renewal approaches.
What is the solution? Collect and organize the information
necessary to secure your loss runs. You absolutely need a
spreadsheet listing all the policies you have now, and all
those you've had in the past 5 years. The table headers
(in a row across the top) are as follows, along with
explanations after the dash:
Inception Date - what date did the policy start?
Expiration Date - what date did the policy end?
Insurance Company - Exact name of insurance company.
Policy Number - Record it accurately.
Premium - use the final audited premium.
Total claims paid - amounts actually paid by the insurance
company.
Total claims reserved - amounts not paid, but set aside in
anticipation of being paid.
Total claims incurred - the sum of paid and incurred. Type
of Coverage - Liability, Auto, Property, Excess Liab,
Professional Liab, Workers Comp
Loss Run Contact - Name, phone, fax, email address of
person who publishes the loss run.
Loss Run Valuation Date.- The date the loss run report says
it is valued.
A good way to get this to happen is to ask your broker for
it. If your broker cannot give you this, declare an
emergency. This is absolutely vital information your
broker needs to effectively run your renewals. Insist that
your broker put this together and deliver it to you. It is
best to do this long before your next expiration date.
You want the policy history rows sorted first by line of
coverage, then by inception date. That way you will see 5
years for each line, in neat chronological order. For each
line, you can sum the premiums and the claims to see how
much money you are making the insurance companies. It is
usually a lot.
Summary: Failure to get complete loss runs on time is a
primary reason for overpaying for business insurance. No
one can accurately quote your insurance without currently
valued loss runs. This means you have to get them every
year, 60 to 90 days in advance of your expiration dates.
Keep organized as I am describing, and you will avoid the
following expensive mistakes:
1) Letting your broker think he or she has a monopoly on
your renewal. If you have your loss runs, that means you
can get quotes from anybody. If you don't have them, you
can't.
2) Having a last minute crisis, because of a missing loss
run. This can result in a quote not happening that could
have saved you a lot of money.
3) Getting ignored by underwriters, who view your
applications for quotations as incomplete without the loss
runs.
----------------------------------------------------
Don Bury is a nationally recognized expert on negotiating
with commercial insurance brokers. Author of "Buyers Guide
To Business Insurance" in 1993, over $20 million in cost
reductions have been delivered so far.
Contractors get free help at
http://www.contractorinsurancetoohigh.com
Don Bury, President
Insurance Cost Reduction Services
3663 Camino Bella Rosa
Sierra Vista, AZ 85650
Phone/Fax: 800-760-1867
email: donbury@icrs.biz
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