What are loss runs and how do they affect apartment insurance pricing?
Loss runs are claims history reports from prior insurers. They are the single most important factor in apartment insurance underwriting and directly determine premium levels and coverage availability.
Loss runs are detailed reports of all claims filed under an insurance policy over a specified period, typically five years. The report includes the date of each loss, a description of the incident, the type of claim (property, liability, workers comp), amounts paid in indemnity and expenses, and amounts held in reserve for open claims. Insurers require loss runs from the current and prior carriers before quoting or renewing apartment coverage.
The loss ratio, which is total incurred losses divided by total earned premium, is the primary metric insurers derive from loss runs. A loss ratio above 60% to 70% signals to underwriters that the property is generating more claims than the premium supports, which leads to premium increases, higher deductibles, or non-renewal. A loss ratio consistently below 40% positions the property for competitive pricing and broader market access.
Under most state insurance regulations, insurers are required to provide loss runs within 10 to 30 days of a written request. For example, Texas Insurance Code Section 2053.051 requires insurers to furnish loss information within 15 business days. Apartment owners should request loss runs at least 90 days before renewal to allow adequate time for marketing the account. Open reserves on loss runs deserve particular attention because underwriters include reserved amounts in their loss ratio calculations. Working with your current insurer to close resolved claims and reduce inflated reserves before requesting loss runs can materially improve your underwriting presentation to prospective insurers.