A clearly defined loss run strategy is a must for agencies looking to expand their commercial lines business. Here’s how to ease the process to increase your agency’s completion rate.
“Past performance is no guarantee of future results." This familiar disclaimer is routinely included in advertisements for investment advice. When it comes to insurance, however, the opposite is often true: An insured's past experience can indeed forecast the likelihood of future claims. Consequently, prospective insurance companies must evaluate an insured's claims history to properly assess the risk involved before quoting or binding coverage.
This is particularly true for commercial insurance. A customer or prospect's claims history— including type, size and frequency—are factors used by carriers to underwrite a risk and develop their premium rates. If agents are not able to provide this information, premiums may be higher than necessary or coverage could be denied entirely, costing the client more money or the agent losing the opportunity to write the business. Meanwhile, both parties waste valuable time.
Getting a copy of the insured's claims history—a loss run or a loss run report—can be a frustrating and often fruitless chore for agencies trying to grow their commercial lines business. Most carriers have specific submission requirements for loss run requests that, if not satisfied, will cause the request to be rejected.
The process can be so arduous that agents may unfairly presume that the carrier is intentionally withholding loss runs to hold on to the business or to avoid assisting the incumbent agent. However, in truth, most carriers would rather simplify the loss run process so it doesn't bog down their day-to-day efforts in other areas.
An agency needs to have a clearly defined loss run process and remain flexible enough to accommodate the range of requirements imposed by different carriers. Here are five tips for requesting loss runs that will help increase an agency's completion rate:
1) Use precise and correctly crafted language. This ensures that the agency satisfies both the carriers' and regulators' requirements and minimizes the chance of a request being rejected because of imprecise language. Specific compliance-related language can be a critical component to resolving issues in cases where a request is ignored or otherwise delayed or denied.
2) Confirm the loss run request contact information for the specific policies. Many companies have a designated department or delivery point for loss run request submissions. In some cases, proper routing of a request may depend on a number of factors, including policy number, type of coverage, state or region where coverage is provided, or if the policy is serviced by a third-party administrator or a managing general agent. Further, agencies involved in a merger or acquisition only adds additional complexity.
Take the time to confirm contact information before sending a request. Alternatively, use a service that automatically and regularly updates carrier contact information.
3) Implement a time-sequenced follow-up process to track requests. A carrier may indicate their timeframe for furnishing a loss run. Or, alternatively, your agency can set its own schedule based on reasonable industry timeframes. Set a reminder to follow up with a second request to the carrier five to 10 business days after the initial request, reminding the carrier that the loss runs are still outstanding and asking for confirmation of receipt and compliance.
4) Understand that requirements for excess & surplus loss runs may vary from standard market requests. While there can be some variation in standard market loss run requests, E&S carriers, including Lloyd's of London, have different instructions. Agencies seeking loss runs from an E&S carrier for the first time should confirm the specific requirements of that carrier.
5) Be professional and non-adversarial. This seems like common sense but when you are frustrated and facing a tight timeframe, focus on complying with the carrier's requirements. If the insurance company is not initially responsive, follow your process for second requests and document any communication with the company. The documentation will be helpful if, after reasonable efforts to secure a loss run have been made, the agency must involve the state insurance department.
Just as other agency operations can be outsourced, there are firms that specialize in providing loss run assistance. Their services range from providing an instructional guide or updating carrier contact information to actively assisting agencies in procuring loss runs. Some firms will even serve as an ombudsman to a state insurance department when an insurance company is failing to process an accurately completed loss run request.
In the highly competitive commercial insurance arena, agencies that invest in developing an efficient and effective loss run strategy gain a distinct advantage over those who do not. The ability to navigate this critical yet confusing stage of the quote process—without irritating or exhausting your prospective client—is essential for an agency looking to grow its commercial lines book of business.
Matt Doman is CEO and loss run specialist at Loss Run Solutions, also doing business as All Things Insurance.