In the realm of InsurTech, the ability to accurately assess risk, calculate premiums, and determine policy renewals hinges significantly on understanding historical losses.
IntellectAI, which offers an omni-channel insurance sales and service suite, recently delved into loss run reports and their use cases within insurance.
This historical data is captured through Loss Runs, documents that compile historical losses associated with an insured over a specific timeframe, it said. These reports are not only vital for insurance companies but are equally crucial for brokers and policyholders. Brokers utilise this information to secure better terms and premiums for clients, while policyholders can better understand their loss history to effectively manage their insurance requirements.
However, Loss Runs are often complex and challenging to process due to the intricacies of the reports, the quality and consistency of the data, and the limitations of existing technologies in managing such information. Addressing these challenges is essential as the insurance industry aims to boost operational efficiency, enhance risk assessments, expedite the submission-to-quote process, and improve overall service to policyholders.
Comprehensive Overview of Loss Run Reports
Loss Runs are detailed documents produced by insurance carriers or brokers that provide a wealth of information about an insured party’s claims history under commercial or specialty insurance policies. These reports include policy details like policy number, period, and line of business, along with comprehensive claim details—type and cause of loss, accident description, dates related to the claim, coverage type, and claim status. They also detail the financial impact of the claim, including amounts for losses incurred, expenses, reserves, recoveries, and net losses.
Key Use Cases of Loss Run Reports
- Underwriting: Underwriters depend on Loss Runs to assess the risk profiles of potential insureds. By examining past claims, they gauge the likelihood of future claims to set fitting premiums. This detailed understanding includes the types, costs, frequency, and severity of previous claims and their locations.
- Premium and Rate Calculation: Actuaries and underwriters leverage historical loss data from Loss Runs to formulate premiums and rates that accurately reflect potential future claims’ risk and cost.
- Policy Renewals: These reports equip insurers with the necessary data to decide on policy renewals and terms adjustment based on a history of frequent or severe claims, which may necessitate higher premiums or lead to non-renewal.
- Broker Negotiations: Brokers utilise loss run data to advocate for better terms and lower premiums for their clients by demonstrating favorable risk profiles.
- Risk Management: Policyholders can use Loss Runs to spot trends in their claims history and undertake measures to mitigate future risks, which can result in fewer claims and more favorable terms.
- Portfolio Management: Insurers analyse aggregated data from various Loss Runs to spot trends, assess segment performance, and make informed decisions about risk exposure, pricing, and product offerings, ensuring profitability and market competitiveness.
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