Captive Insurance
An insurer owned by the businesses it covers, the forms it takes, and what separates a captive from simply retaining the risk.
Glossary
Loss Run Insurance
The claims history an underwriter asks for at renewal, how to read paid against incurred, and why the valuation date changes what it says.
A loss run in insurance is a report of claims recorded under a policy or group of policies for a specified period. It usually identifies individual claims and shows their status, amounts paid, and outstanding reserves as of a particular date.
Businesses and their brokers use loss runs when arranging or renewing commercial insurance. They also help explain past incidents and the claims that remain open. The Hartford describes the report as a record insurers use to assess a business’s claims activity and risk. The Hartford’s explanation of insurance loss runs.
What does a loss run contain?
The layout and level of detail vary by insurer, policy, and report settings. Common fields include:
| Field | What it tells the reader |
|---|---|
| Insured name and policy number | Which business and policy the report covers |
| Policy period | The coverage dates associated with the reported business |
| Claim number | The identifier used to locate the individual claim |
| Loss and reporting dates | When the incident occurred and when it was reported |
| Description | A short account of the event or type of loss |
| Status | Whether the claim is open, closed, or reopened |
| Paid amount | Payments recorded to date on the stated basis |
| Outstanding reserve | The estimated amount still to be paid |
| Incurred amount | Paid amounts plus the relevant outstanding reserves |
| Valuation date | The date at which the financial figures are evaluated |
Some reports separate indemnity, medical costs, and claim handling expenses. Others combine particular costs or show recoveries separately. The headings and report notes explain which amounts belong in each total.
Paid, reserved, and incurred losses
These three figures describe different parts of a claim’s financial position.
Paid loss is the amount already paid. Outstanding case reserve is the current estimate of further loss payments. Case-incurred loss combines them:
Case-incurred loss = paid loss + outstanding case reserve
The Casualty Actuarial Society distinguishes case reserves from payments already made and describes their sum as reported or case-incurred losses. CAS’s explanation of claim and reserve terminology.
For example, a claim with $10,000 paid and a $15,000 outstanding reserve has $25,000 in case-incurred loss. The insurer has paid $10,000, while the remaining $15,000 is an estimate. The claim’s eventual cost could be higher or lower.
Adding the paid amount to the incurred amount would count the payments twice. This is a common source of confusion when reports use shortened headings such as “Paid,” “O/S,” and “Total Inc.”
How to read a loss run example
The following fictional report shows loss payments and outstanding loss reserves for three claims as of 31 August. Handling expenses, deductibles, and recoveries are excluded from this simplified example.
| Claim | Description | Status | Paid loss | Outstanding reserve | Case-incurred loss |
|---|---|---|---|---|---|
| A | Water damage | Closed | $12,000 | $0 | $12,000 |
| B | Customer injury | Open | $8,000 | $22,000 | $30,000 |
| C | Reported property incident | Closed | $0 | $0 | $0 |
| Total | $20,000 | $22,000 | $42,000 |
The business has three recorded claims, although only two have payments. A zero-payment claim can still appear in the history. The report alone may not explain whether it involved a withdrawal, a coverage decision, or another outcome.
Claim B accounts for $30,000 of the $42,000 incurred total, but $22,000 of its cost is still estimated. It deserves further context when an underwriter reviews the account.
Suppose a later report shows Claim B closed with $28,000 in total payments. The account’s combined paid and incurred loss would then be $40,000: $12,000 for Claim A plus $28,000 for Claim B. The earlier $42,000 figure was a snapshot, not a final bill.
Why the valuation date matters
A loss run can cover an old policy year while containing newly updated figures. Claims from that year may receive additional payments, reserve revisions, recoveries, or changes in status long after the policy expires.
The policy period tells the reader which coverage is being examined. The valuation date tells the reader how current the claims figures are. The date a report is printed should not automatically be assumed to be its financial valuation date.
Insurers can set specific freshness requirements for submissions. For example, one Richmond National application requests five years of liability loss runs valued within 45 days. That is a requirement for that application, rather than a universal rule for all insurance placements. Richmond National’s application requirements.
What do underwriters look for?
The total cost is one part of the picture. Underwriters can also examine the frequency of incidents, the size of individual losses, recurring causes, and the uncertainty attached to open claims.
Context helps explain the numbers. Several water-damage claims from the same building suggest a different question from unrelated incidents across many locations. A business that has doubled its number of vehicles also has a different exposure base from one whose fleet has stayed the same size.
A useful submission can explain a major incident and the changes made afterward, such as replacing a faulty pipe system or revising a maintenance process. Those explanations supplement the insurer’s report rather than alter its figures.
How to request a loss run
The policyholder can contact the insurer or servicing agent and specify the legal entity, policy numbers, coverage types, years required, and the requested valuation date. If the business used several insurers during that period, reports may be needed from each one.
Access arrangements vary. Travelers’ request process for assigned-risk workers’ compensation, for example, limits requests to the policyholder or assigned producer and requires a broker-of-record letter for release to another party. Travelers’ loss-run request requirements.
Once received, check that the report covers the requested entities and years. An omitted policy period can look like a clean year when it is actually missing information.
If an entry appears incorrect, the insurer or claims administrator should investigate it and issue an explanation or corrected report. A requester should not change the source figures independently.
What a loss run does not show
A loss run reports the claims within its stated scope. It may not include uninsured incidents, events never reported to that insurer, or claims under another policy. An empty report therefore establishes a narrower fact than “this business has never suffered a loss.”
It also serves a different purpose from a certificate of insurance, which summarizes evidence of coverage. A claims bordereau can contain similar claim information, but is commonly used for structured reporting across a delegated or reinsured portfolio.
Reading the dates, definitions, and open reserves alongside the totals makes the loss run useful as a claims history, while preserving the distinction between recorded experience and future outcomes.
