Loss runs are a critical evaluative tool for any commercial insurer. However, most insurers still perform them manually. It’s likely most insurers would agree manual loss runs are labor intensive, often requiring underwriters to sift through mountains of paperwork to unearth the information they need. That presents a number of problems that can lead to poor underwriting decisions. For example, what happens if valuable information is missed, either due to human error or inadequate resources? Or if that information comes too late in the underwriting process? Not only that, assigning experienced and talented underwriters to tedious research when their time would be better spent making critical underwriting decisions is not the best use of resources. These issues can snowball into a process that’s inefficient and costly in more ways than one—putting your business at risk.
Drive underwriting efficiency with automated loss runs
The good news is, performing automated loss runs that are based on a contributory data base solves these problems, and more. In fact, automated loss runs are not only much more resource-efficient than manual loss runs, they can reveal millions of dollars of otherwise potentially undiscovered prior losses. That’s very important information you want in your hands early on in the underwriting process.
Test results prove the real value of automated loss runs
To prove this point, here at LexisNexis® we used our C.L.U.E® Commercial contributory data solution to perform automated loss run tests on three leading carriers. The tests discovered* more than 2,000 claims totaling approximately $30 million in prior losses that these carriers were not aware of at time of quote. Even more startling, of that $30 million, more than 30% was attributed to only twelve policies—less than 1% of the claims. If you’re not yet convinced of the value of automated over manual loss runs, here’s the breakdown of the test runs by carrier—which shows results were consistent across the board:
- Carrier A had more than 700 previously undiscovered claims totaling over $13 million—38% of that total, or $5 million, came from only five claims
- Carrier B had more than 1,000 previously undiscovered claims totaling $11 million—22% of that total, or $2.5 million, came from only three claims
- Carrier C had almost 250 previously undiscovered claims totaling $5 million—36% of that total, or $2 million, came from only four claims
Just take a minute to think about the results, and all the implications. These undiscovered claims were missed by a manual loss run process, and it didn’t take missing much to make a huge impact. Had these carriers used C.L.U.E. Commercial during the underwriting process, they could have gained a fuller understanding of the risks posed by any of the policies. That knowledge could have led them to rate the policies differently, initiate coverage changes to reduce potential risk, or simply reject risky policies altogether.
Automated loss runs combine the benefits of drawing from a robust database of claims information with the agility, speed, and accuracy of automated processes—increasing efficiency, reducing costs, and ensuring you have the knowledge you need to make the best underwriting decisions possible.
What difference could a tool like C.L.U.E. Commercial make in your business?
* Statement based on analysis prepared by LexisNexis, individual results may vary.