How your claims history follows you: loss runs, explained

The honest answer is that your claims history is the first thing an underwriter reads and the last thing most contractors look at. It arrives as a loss run: a report from each carrier you’ve had, listing every claim under every policy, what was paid, what’s still reserved, and whether the file is open. The underwriter reads it before the application, before the general liability limits, before your safety program. If it says something you didn’t know, the quote will too. Here’s what’s on a loss run, how to read it the way the underwriter does, and what to do about the lines that are wrong or stale before they cost you.

What a loss run actually is

A loss run is a carrier’s own record of your account. One report per policy per year, usually, though most carriers will run several years on one document if you ask. Each line is a claim. For each one you typically see the date of loss, the date it was reported, a short description (“employee laceration, chainsaw,” “third-party property damage, sewer lateral”), the amount paid so far, the amount reserved, the total incurred, and the status: open or closed.

That’s it. No narrative, no context, no note that the sewer lateral was mismarked and you had a valid ticket. Just the numbers and a status. Which is exactly why you should read it before anyone else does.

Most underwriters ask for about five years, and they ask for every line: workers’ comp, GL, auto, equipment. If you’ve changed carriers, they want the prior carrier’s runs too. A gap in the years reads as something you’d rather not show, even when it’s just a report you forgot to request.

Paid, reserved, incurred: the three columns that matter

Here’s where contractors get surprised. A claim with nothing paid can still be the most expensive line on the report.

Paid is what the carrier has actually sent out: medical bills, a repair invoice, a settlement, defense costs.

Reserved is the adjuster’s estimate of what the claim will still cost. It’s set early, often within days of the first report, and it’s set conservatively because the adjuster doesn’t yet know how bad the back injury is or whether the homeowner will hire a lawyer.

Incurred is paid plus reserved. That’s the number underwriters price on.

So a septic-lateral claim reported in April, with a reserve set high while the adjuster waited on an engineer’s report, sits on your loss run at the full reserve until somebody closes it. If the claim was resolved for far less, or denied, or the reserve was never revisited, the number stays wrong until the file is closed and the reserve released. Underwriters read the incurred column. They don’t call the adjuster to ask if it’s stale.

The practical rule: every open claim on your loss run deserves a question. What’s the current reserve, what’s it based on, and what would it take to close it. Ask through your agent. Reserves do get revised when someone asks with a reason.

Frequency and severity read differently

Underwriters sort claims two ways, and it changes what they think of you.

Severity is one big claim. A trench wall let go, an employee was hurt badly, the incurred number is large. Underwriters can live with severity if the story is clean: a single event, reported promptly, handled well, with something changed afterward (a competent-person program, trench boxes bought, a written plan). One bad day in five years describes most contractors who work in dirt.

Frequency is a lot of small claims. Four cracked windshields from spreader gravel, three backed-into mailboxes, two minor hand injuries, a slip claim on a Colorado Springs parking lot. None of them cost much. Together they say the operation runs loose, and underwriters believe that frequency predicts severity. A run with eight small claims typically prices worse than a run with one large one, and it’s harder to explain.

This is why the “should I report it” question matters. It’s also why the answer isn’t simply “never report small things.” Some policies require reporting every occurrence, and a claim you sat on that grows later is a bigger problem than a small line on a report. Ask before you decide, every time.

The experience mod for workers’ comp

Workers’ comp adds a number to the story: the experience modification. Colorado is an NCCI state, so the mod is NCCI’s calculation and it moves with you.

The mod compares your actual losses over a set of prior policy years to the losses expected for an account with your class codes and payroll, and it comes out as a multiplier on your premium. Above the class average, you pay more. Below it, less. The formula weights frequency more heavily than severity, which is another reason a run of small injuries costs more than people expect. Only accounts above a payroll and premium threshold get a mod at all, and the threshold is in NCCI’s rules rather than on this page, so a two-person crew may not have one yet.

Three things to know about the mod. It lags: the years in the calculation are prior years, not the one you’re in, so a bad year shows up later and stays for a while. It follows you: switching carriers doesn’t reset it, because NCCI calculates it, not the carrier. And it’s checkable: NCCI issues a worksheet showing the payroll and losses used, and errors in payroll by class or a claim that should have closed do get corrected when someone asks. The workers comp audit article explains where the payroll numbers in that worksheet come from.

How the loss run shapes the quote

On a new account, the underwriter typically does four things with the report. Checks the incurred total against the premium you paid, to see whether the carrier made or lost money on you. Looks for open claims and asks about the reserves. Sorts the claims into frequency and severity. Then reads the descriptions for anything that doesn’t match the application: a snow claim on an outfit that said it doesn’t plow, a chainsaw injury on a crew that said it doesn’t climb.

That last one is the trap. The loss run is a truth serum for the application. If the tree service side of your landscape business produced a claim and the application says no tree work, the underwriter will price the tree work and the credibility problem both. Describe the operation the way the loss run already does.

What the underwriter can’t see is what changed. That’s your job. A one-page letter with the submission, saying what happened on the large claim and what you did afterward, is the single most useful thing a contractor can add to a loss run with a bad year on it. Underwriters read those. They price on the numbers, but they decide whether to quote at all on the story.

How to request them, and what to ask for

Carriers generally provide loss runs on request to the named insured. Ask your current agent to request them, or write to the carrier yourself if the agent is slow. Ask for all lines, all years you were insured, including the ones that ended. If you had a prior carrier, ask them separately. Put it in writing and keep the email.

Then read them like an underwriter:

1. Every open claim. What’s reserved, why, and what would close it.
2. Every claim over a few thousand dollars incurred. Write two sentences about what happened and what changed.
3. Every description. Does it match what you told the last carrier, and what you’ll tell the next one?
4. The gaps. Missing years or missing lines need a report or a written explanation.
5. Claims that aren’t yours. It happens: a claim from a similarly named outfit or a policy that was never yours. Get it corrected in writing.

Do this before you shop, and again about a month before renewal. Reserves don’t change overnight, and an underwriter who gets the corrected run and the explanation letter in the same submission prices a different account than one who gets a stale run and silence.

When the history is bad

Sometimes it is. A utility strike with a big property number, a crew injury that went to surgery, two snow claims in one winter. You can’t make it go away. You can make it explainable, and you can make it old. Claims age out of the window underwriters look at, and a bad year followed by three clean ones reads as a contractor who learned something.

In the meantime, the placement changes. Where a clean landscaping account gets three quotes from the private market, an account with a bad run may get one, or may go back, on the comp side, to the state-created insurer that has a duty to offer coverage under current law. The placement article covers how that works in Colorado. What doesn’t help is switching carriers to escape the run. The run follows you, and the mod follows you, and a new carrier requests both on day one.

Where to go from here

Pull your loss runs this week, all lines, all years. Send them with your dec pages and a policy review starts there, because the loss run and the dec page together are the whole file the next underwriter will see. If you’re in Douglas County with a mixed crew and a mod you’ve never looked at, that’s the first thing we’ll ask for.

Serving businesses located in Colorado. Coverage is determined by the policy language and the carrier.