What is a loss run report?

Loss run reports are the insurance industry's equivalent of a credit report — they tell a prospective carrier everything about your claims history and are the most influential factor in underwriting and pricing decisions. Every tree service owner should understand what they contain, how to obtain them, and how they affect your ability to get competitive quotes.

A loss run report includes the policy period, each claim's date of loss, claim number, type of claim (bodily injury, property damage, workers' comp, auto liability, etc.), description of the incident, amounts paid to date for both indemnity (the actual claim payout) and expenses (legal and adjusting costs), and open reserves (the amount the carrier has set aside for anticipated future payments on open claims). The report also shows your total incurred losses — the sum of paid amounts and outstanding reserves — which is the number underwriters focus on most.

To obtain your loss runs, submit a written request to your current carrier (and any prior carriers for the period needed). Under most state insurance regulations, carriers must provide loss runs within 10 to 14 business days of a written request. However, in practice it often takes longer, so request them at least 60 days before your renewal date. You will need loss runs from every carrier that provided your GL, auto, workers' comp, and umbrella coverage during the requested period — if you switched carriers during the past five years, you need reports from each one.

For tree service companies, loss runs deserve careful review beyond just providing them to prospective carriers. Check that every claim listed is legitimate — occasionally claims are attributed to the wrong policy. Verify that closed claims show $0 in reserves (open reserves on closed claims artificially inflate your loss history). Look at the descriptions and make sure they accurately reflect what happened. If you see errors, contact the carrier's claims department to request corrections before shopping your renewal.

Underwriters evaluate loss runs using several metrics: total incurred losses relative to premium (loss ratio), claim frequency (number of claims per year), claim severity (average cost per claim), and trending (whether claims are increasing or decreasing). A tree service company with three years of clean loss runs and a loss ratio below 40 percent will receive the most competitive quotes. Conversely, a company with a loss ratio above 60 percent, frequent claims, or any single large claim will face higher premiums and potentially declinations from standard carriers.

One strategic consideration: if you have a claim in development that you believe will close favorably, timing your renewal marketing around that closure can improve your results. Discuss this with your broker, who can advise on whether to market early, at renewal, or slightly after to present the best possible loss run picture to prospective carriers.