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Insurance Carrier Loss RunsInsurance carrier loss runs are a report that shows what claims have been reported to the insurance company.  This is a report that is prepared by the claims department but can also be generated by many underwriters.   The loss run reports can show the claims, date claim made, when matter originated, amount reserved for claim (indemnity & expenses), amount paid for claim (indemnity & expenses),  and whether open or closed.

It is standard operating procedure for general commercial risks to require loss runs on every account.  Professional Liability Insurance Underwriters request Insurance Carrier Loss runs with more frequency now.  Loss runs are generally requested for the past 5 years on Professional Liability Insurance for new business by the underwriter.  And at renewal for any open claims that were made against a different insurance carrier when the policy was 1st written by the incumbent insurance carrier.

The major purposes for loss runs are: 

1.       Verify that the information on the application as to claims reported and the amounts match what was disclosed.  Often times the Law Firm or Accounting firm may or may not know the total amount that was settled for and the claims expenses for a particular claim. 

2.       If the inventory of claims does not match what was disclosed to find out why.

3.       With new business underwriting, if the incumbent carrier’s premium seems out of line to verify that there are no hidden claims not disclosed by the firm.

4.       With renewal accounts if there was an open claim when written by the current carrier, to see what the development of that claim has been over the past year and if it has been closed.

Since past claims experience is one of the best predictors for future claims activity, the frequency and severity of claims is one of the key components of underwriting Lawyers & Accountant Malpractice Insurance.  Most underwriters will no longer give out even a ballpark figure if it is known that there are claims without this vital tool.

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