An integral part of evaluating new submissions for commercial insurance carriers is reviewing a business’ loss runs to assess the claims experience from previous commercial insurance policies. Loss runs allow an insurer to understand what types of claims have been previously filed, the frequency of loss and the financial impact of these losses. An insurer can use loss runs to price based upon risk, or decline a risk because it’s outside of their underwriting guidelines. In today’s digital world, however, traditional loss runs that have been historically used to underwrite and price a commercial account are no longer sufficient or efficient for a number of reasons, including:
- Static Images vs. Digitalization. Many traditional loss runs are submitted to insurers as images. The static image is then used, as is, to rekey the data into insurers’ systems or pushed through other technology to convert the image into a digital format. This manual intervention in the underwriting process requires incremental resources and time, and creates the potential for errors as it’s rekeyed. Additionally, the lack of electronic data creates hurdles for carriers looking to leverage automation and predictive modeling solutions.
- Lack of Standardization. It’s important to note that not all insurers report the same data points, creating a lack of standardization across traditional loss runs provided to agents by each commercial insurance carrier. For example, the reporting of reserves or the driver of a commercial vehicle will vary by insurance carrier. Even when there is agreement regarding the field, the values within that field will vary greatly by insurer. Not only are the data points not standardized, but each insurer’s loss runs are organized and look different. These visual differences make it time consuming and cumbersome for carriers to evaluate the data.
- Lack of Summary Data. When a risk experiences losses with multiple insurers, traditional loss runs don’t summarize the data by policy term across all insurers, documenting the number of losses and total incurred by year.
- Incremental Costs. Loss runs contribute to a variety of incremental expenses. Carriers incur costs in providing loss runs to their agents and when attempting to leverage the data within their underwriting and pricing, particularly if the information is antiquated.
- Adoption of Direct Channel. During the past few years, small business owners have demonstrated a willingness to purchase commercial insurance direct from an insurance carrier. While this channel is still relatively small, it is expected to grow. Using the independent agent to procure loss runs isn’t a reliable option for carriers writing direct or when the independent agent submits a piece of business that was previously written with a direct carrier.
Today’s digital world needs a better loss runs solution like LexisNexis® C.L.U.E.® Commercial. Our unique solution provides insurance carriers with a standardized electronic report with a five-year look back across the primary commercial lines of business including commercial auto, BOP, farm, artisan contractors, commercial package and worker’s compensation. C.L.U.E. Commercial enables carriers to support today’s automation needs while ensuring accuracy in the loss data.
To learn more about how to optimize your underwriting insight and increase the ease of doing business, call us at 800.458.9197 or email us at firstname.lastname@example.org.