Meet Joe, a contractor seeking general liability and workers'compensation insurance for his business. His application statesthat he installs residential flooring. In the Dark InsuranceCompany submits a quote without conducting a loss run or verifyingJoe's application. Sleeping Easier Insurance Company enters Joe'sdetails (name, business name and address) into a contributory losshistory database and immediately discovers an open worker'scompensation claim for a back injury sustained from a high fall.The claim detail reveals that Joe has been installing exteriorsiding, not just laying wood floors.

Which carrier would you rather be?

Automating Loss Runs with a Contributory Loss HistoryDatabase

The process of gathering manual loss runs is labor- andtime-intensive. It places many carriers in the unenviable positionof choosing between delaying their time to quote, or proceedingwith incomplete or inaccurate information. Rock, meet hardplace.

The challenge of collecting loss runs isn't unique to commercialinsurance. For more than 25 years, personal lines carriers havebenefited from automated loss runs enabled by a contributory losshistory database.

A contributory loss history database is a centralized datarepository where every contributor receives real-time access to theindustry-wide dataset, across all lines of business. Standardizedloss codes enable contributors to plug the data into analyticengines—enabling them to automate loss runs and making riskselection more efficient.

Improving Risk Selection

With a contributory loss history database, carriers have accessto all claims history within the database—which allows them tobetter understand the risk involved, make better underwritingdecisions and improve risk selection. In addition, having losshistory available in real time enables carriers to empower theirunderwriters to make informed decisions about the risks involved,throughout the policy lifecycle.

Here are a few of the scenarios in which a contributory losshistory database can benefit carriers.

Scenario 1: Make better decisions with newbusiness
Maria runs a catering business and her businessowners policy (BOP) is up for renewal. However, she'd like toswitch agents and doesn't want her previous agent to know she'sleaving. Her new agent cannot obtain a loss run without going backto the current agent. However, Sleeping Easier Insurance Companyaccesses Maria's loss history through its contributory loss historydatabase, enabling them to win Maria's business.

With a contributory loss history database, carriers can obtain acomplete picture of the risk involved, particularly with newbusiness.

Scenario 2: Find additional, undisclosed losshistory
The Main Street Property Management Company ownsa strip mall with several retail occupants and is seeking acommercial package policy. Using a contributory loss historydatabase, Sleeping Easier Insurance Company conducts alocation-based search to obtain loss histories. While no losses arefound on the company, several of its tenants have reported firelosses due to maintenance issues.

With a contributory loss history database, carriers can linkdisparate information, including business entities, operations orlocations, to create a comprehensive understanding of the riskinvolved.

Scenario 3: Make better decisions at point ofrenewal
Alex's general liability policy is up for renewalwith In the Dark Insurance Company. When the initial risk waswritten two years ago, there was an open claim with a reserve of$100,000 for a products liability loss. That claim is now closed.Because the manual loss run process is so onerous, In the DarkInsurance quotes based on the initial risk. Alex's agent shops thepolicy to Sleeping Easier Insurance Company, who sees from thecontributory loss history database that the previous claim is nowclosed. Sleeping Easier Insurance provides an appropriate quote toAlex's agent—and wins the business.

With a contributory loss history database, carriers can enhanceunderwriting at point of renewal. By monitoring reserves closely,they can price risks appropriately, retain existing customers andeven gain new ones.

Scenario 4: Attract the business you want
Tired oflosing business to its competitors, In the Dark Insurance Companysigns onto the contributory loss history database. As they begin touse automated loss runs, they realize that the bulk of their newbusiness—which they would have previously underwritten, potentiallywithout complete loss runs—warrants a closer look. Further, byobtaining automated loss histories on each of their upcomingrenewals, In the Dark Insurance discovers that much of theirbusiness was riskier than they thought.

With a contributory loss history database, carriers can ensurethat they're writing the business that they want. The scenariomentioned above is a real one, wherein bruised business driftedtoward In the Dark Insurance. The market didn't go where theinsurer positioned itself; it went where it was pricing.

Looking Ahead

Carriers can improve the efficiency of risk selection and enabledisciplined underwriting by tapping into a contributory losshistory database. In addition, its potential to invigoratecommercial lines goes beyond new business. It can enable carriersto enhance their book of business—for example, by monitoringpolicies with open reserves to better price that risk at time ofrenewal. The database can also enable carriers to empower theirclaims adjusters to make better decisions. For example, a savvyclaims adjuster can search prior claims for negligence, fraud orother patterns that might raise a red flag.

Finally, a contributory loss history database can be atremendous benefit to the industry as a whole. Having standardizeddata means carriers can empower their underwriters to make betterdecisions in the field and at point of sale. Through enhanced riskselection—and the more informed decisions that it enables—carrierscan make better underwriting and pricing decisions.

To learn more about our loss history contributory database, aswell as other solutions that can assist you across the insurancecontinuum, please visit www.lexisnexis.com/automatedlossruns.