The mental model

A loss run is a list of every claim a carrier has handled for a specific insured during a specific policy term. The list contains, at minimum, the date of loss, a description of the loss, and a financial summary (paid, reserved, incurred). The loss run is the carrier's official record of its claims experience with that insured, and it is the document the next carrier will use to price the renewal or the new submission.

Loss runs are produced by every carrier on demand for every insured. The format varies dramatically because no industry standard governs the layout. Each carrier's claims system generates its own report. Brokers re-format and consolidate loss runs from multiple prior carriers when an insured has changed markets. The result is a submission attachment that is critical to underwriting and inconsistent in presentation. Reading loss runs accurately requires understanding what each column means in that specific carrier's system, what the reserves represent at a given valuation date, and how the data has changed over time. Underwriters develop pattern recognition for major carrier formats; IDP systems have to handle that pattern recognition at machine scale.

Reading a loss run

A standard loss run produced for underwriting use typically contains the following columns or fields, although the exact labels and ordering vary by carrier.

DOL, paid, reserved, incurred

The financial mechanics of a loss run reduce to four numbers and the relationships between them.

Paid

The cumulative cash paid out on the claim as of the valuation date. Includes loss payments to claimants, defense and ALAE payments, vendor payments. Some loss runs separate indemnity from ALAE; some combine them. Knowing which is critical because ALAE-heavy claims (litigated, complex) develop differently than indemnity-heavy claims.

Reserved

The carrier's estimate of remaining payments. Reserves are set by adjusters based on case-by-case evaluation, with internal review structures for larger claims. Reserves can move up or down as facts develop. A claim with $5,000 paid and $50,000 reserved is much more concerning than $50,000 paid and $5,000 reserved on the same incurred.

Incurred

Paid + reserved. The total expected cost of the claim. The headline number for portfolio analysis. Underwriters look at total incurred to assess loss frequency and severity, with paid-to-incurred ratios as a secondary lens for maturity.

Date of loss vs valuation date

The DOL is when the event happened. The valuation date is when the loss run was generated. The gap matters: a loss run generated 6 months after policy expiry may show different incurred numbers than one generated 24 months after expiry, because reserves develop during the interim. For renewal underwriting, current valuation matters; for trend analysis, multi-valuation comparisons matter.

The signal in paid vs incurred

• Low paid + high reserved = early-stage claim, uncertain outcome.
• High paid + low reserved = mature claim, near closure.
• Equal paid and reserved = mid-stage, watch for development.
• Paid below reserved consistently across the run = potentially over-reserved book (favorable).
• Paid above prior reserves consistently = potentially under-reserved book (unfavorable).

Open vs closed

Status drives interpretation more than any other field on the loss run.

Closed claims

The claim is resolved. Paid is final, reserves are zero, incurred equals paid. The claim cannot develop further unless it is reopened (rare but possible for workers compensation claims with permanent components or for declared bodily injury claims that resurface).

Open claims

The claim is still active. Reserves represent the carrier's current best estimate of remaining cost. The claim can develop in any direction. Open claims older than 24-36 months on lines with normal reporting and resolution patterns often signal complexity (litigation, dispute, severity).

Open in litigation

The claim has filed suit and is being defended. Defense costs (ALAE) accrue continuously, settlement values shift with discovery, and the claim can take years to resolve. Loss runs flagging "in litigation" warrant closer attention.

Closed without payment

The claim was reported but resolved without any payment to the claimant. Common reasons: coverage denial, claimant abandonment, lack of liability, statute of limitations. The claim costs the carrier nothing in indemnity but may have generated ALAE.

Reopened

A previously closed claim that has been reopened due to new developments. Reopening is unusual and warrants attention, particularly for workers compensation claims where reopening often correlates with disability progression.

Denied

The carrier has denied coverage. The claim still appears on the loss run because the insured reported it, but the carrier has refused to pay. Denied claims typically show zero paid and zero reserves but may carry residual ALAE. Disputed denials sometimes reverse, with significant retroactive payments.

Development triangles

For lines with long-tail claim development (GL, WC, professional liability, D&O), a single point-in-time loss run does not reveal the full picture. Development triangles show how losses have moved over time.

The triangle structure

A development triangle arrays accident years (or policy years) on one axis and valuation periods on the other. Each cell shows the cumulative incurred (or paid) loss as of that valuation period. The shape is triangular because older accident years have more valuation periods than newer ones.

Example: 5-year incurred triangle

What the triangle shows

• The 2020 row is mature: incurred has stabilized at $245K after 60 months.
• The 2021 row is still developing at 48 months ($285K) and may continue upward.
• Newer years (2023, 2024) are still in the early development period.
• The trajectory of the 12-month column (120, 135, 140, 155, 165) shows year-over-year severity inflation.
• Development factors (24/12, 36/24, etc.) feed actuarial ultimate-loss estimation.

Why this matters in underwriting

A loss run showing only the most recent valuation can mislead. Recent accident years look benign because the claims have not had time to develop. Mature accident years show what the long-run loss ratio actually looks like. Underwriters who do not adjust for development under-price recent years.

Loss runs by line

Each line of business has characteristic loss run features.

Workers compensation

WC loss runs separate medical from indemnity. Most WC claims close quickly and cheaply (medical-only). A small fraction become lost-time claims with indemnity payments. A smaller fraction become permanent-disability claims that stay open for the claimant's working life. The severity distribution is heavily skewed; the largest 1-2% of claims drive the bulk of total loss.

General liability

GL loss runs aggregate bodily injury and property damage claims. Most GL claims are small and close quickly. The tail is bodily injury claims that escalate through litigation. A loss run with a single open BI claim in litigation can shift the entire risk profile.

Commercial auto

Auto loss runs blend property damage (high frequency, low severity) with bodily injury (moderate frequency, high severity). Severity has been escalating with the nuclear-verdict environment, particularly for trucking and large commercial fleets.

Property

Property loss runs are dominated by water damage, weather, and theft. Most claims are bounded by limit and resolve quickly. Catastrophe losses (hurricane, wildfire) appear as discrete large events. The claim list is often short relative to other lines.

Professional liability and D&O

Loss runs for these lines often show small numbers of large claims, with very long development timeframes. A securities class action may open in 2018 and not resolve until 2026. Reserves move significantly as the case progresses through discovery, summary judgment, and settlement negotiations.

Cyber

Cyber loss runs are still evolving. Ransomware claims dominate severity in recent years, with social engineering and BEC losses providing frequency. The short policy history means many cyber loss runs only cover 3-5 years.

Format chaos

Loss runs are the most format-fragmented document in commercial submissions. The contributors:

Carrier-by-carrier variation

Every major carrier produces loss runs from its own claims system. Travelers, Chubb, AIG, Liberty Mutual, Hartford, Zurich, CNA all have different layouts, different column orderings, different terminology, and different levels of detail. A multi-line insured changing brokers may have loss runs from 5-10 different carriers in a single submission.

Format types

• PDF reports. The most common. Generated from claims-system templates. Frequently scanned (faxed by an old TPA, printed and re-scanned by the broker).
• Excel exports. Less common but useful when available. Direct claims-system extracts.
• Broker-formatted summaries. The broker has consolidated multiple carriers' loss runs into a single broker template.
• Carrier portal extracts. Some carriers offer broker portal access where the broker downloads loss runs as needed.

Inconsistencies

• Date formats (MM/DD/YYYY vs DD/MM/YYYY vs YYYY-MM-DD).
• Currency representation (with or without decimals, with or without thousands separators, with or without currency symbols).
• Status codes (open vs O vs Active vs In Progress).
• Coverage codes (carrier-specific abbreviations rarely consistent across systems).
• Reserve definitions (some include ALAE, some separate it).

The valuation date problem

A submission package may include loss runs dated months apart. The most recent loss run for one carrier may be 3 months old; for another, 12 months old. Cross-carrier consistency requires either re-running the older loss runs at a current valuation date or accepting the inconsistency in analysis. In practice, brokers often produce consolidated loss runs at a unified valuation date for marketing presentations, but the underlying carrier-by-carrier loss runs are still requested by underwriters for verification.

Severity flags and patterns

Beyond aggregate frequency and severity, loss runs reveal patterns that inform underwriting.

Severity concentration

A book with one or two large claims and many small ones tells a different story than a book with consistent moderate severity. The concentration suggests where the structural risk lies. A trucking fleet with one $4M nuclear verdict and otherwise quiet claims activity has a different risk profile than the same fleet with steady $200K-$500K claims activity.

Trend

Year-over-year severity escalation is a flag. Frequency holding steady but average severity rising 8% per year suggests inflation, venue change, or behavioral change in the underlying exposure.

Specific cause patterns

Multiple losses with the same cause (slip-and-fall, employee fraud, water damage from the same building system) suggest underlying operational issues that may continue. Underwriters often request narrative on what corrective action the insured has taken.

Litigation rate

The percentage of claims that go into litigation (vs resolve through direct settlement) is a venue and exposure signal. A book with elevated litigation rates has higher ALAE and more uncertainty. Some lines (commercial auto in plaintiff-friendly venues) have very high litigation rates and require pricing accordingly.

Reopen rate

Reopened claims are unusual. A book with multiple reopens warrants investigation; the carrier's reserves at first close may have been inadequate, or the underlying losses may be reactivating for a structural reason.

Denial rate

A book with elevated denials may suggest aggressive carrier denials or insured-side coverage gaps. Denials don't directly cost the insured money but signal coverage friction that may be material.

Where IDP earns its keep

Loss run extraction and normalization is one of the most universally requested IDP capabilities in commercial insurance. Every submission has them, every renewal has them, the formats are inconsistent, and the analysis they enable is foundational to underwriting. Doing this well is genuinely hard because of carrier format variance, but the payoff is immediate and recurring.