The Standardization of Loss Runs

The analysis of loss runs by those individuals that benefit from the report is critical to
determining an employers’ past injury sources so a corrective action agenda can be
established. The users of Loss Runs are Underwriters, Agents, Loss Control Reps,
Attorneys, Reinsures and others representing a broad cross section of education and
experience. Therefore, simplification of these valuable reports will serve to expedite an
understanding of the data they contain. The review of loss runs, prior to the actual visit
of an account, can help steer the Loss Control professional to the problem area and that
improves efficiency as we focus immediately on elimination of the injury source. Loss
runs, or claim reports, vary from company to company each with a different style, font,
text and format. There-in lies the problem as Loss Control workers need to spend
additional time reviewing each loss report to gain the appropriate level of
understanding before consulting can begin. This may also frustrate clams professionals
as they may have to review loss reports from other companies for subrogation purposes
and historical account analysis.

Just as in the cost of an injury there is an indirect cost associated with injuries, the same
holds true with service efficiently. The indirect-wasteful–cost can be attributed to lack
of clear, easy to understand loss runs. This indirect cost from lack of efficiency
transcends beyond the Loss Control Rep. Also, it negatively affects Underwriters,
Employers and agents, as they have to pick through the data to make sense of it.

If we look at other documents that Loss Control personnel have to review we readily find
standardization in the documents of:

• The ACORD Application
• The Workers’ Compensation contract/policy
• Material Safety Data Sheets
• In general, Safety Program structure
• Experience Modification Factor Worksheet

Perhaps carriers want loss runs to be hard to understand as the font may not fax well or
the copy is poor because of a company logo in the middle. Perhaps they feel this will
hinder their information from being readily comprehended by competitor agents and
carriers. I say they miss the intent of why a loss run is generated at all, that is to inform
the user of needed data. I believe that claims professionals would agree that, the more
we as an industry can deliver clear and understandable information to the people that
need the information, the better we fulfill the needs of the organization.

I would suggest a simpler easier way to do business and enhance effectiveness. I
recommend a national voluntary standard Loss Report form with a pre-set font
size and format. Complex data tables need simplicity to invite analysis. An employer
may get his loss runs, which we all know is critical to review to take corrective
preventative action, but may not spend a fair amount of time with the document as it is
too complex to understand. A Loss Control Engineer may not be able to read the small
font print and miss a loss source that has caused a past injury. In addition, terms such as
Incurred, Reserved, Paid, Allocated Loss Adjustment Expense and Unallocated Loss
Adjustment Expense should have common definitions that are accepted industry wide.
Claims professionals could give solid insight into what information is most useful to
report users.

The main push for a standardized Loss Run document should come from the
professionals who are responsible for that side of the house. Claims managers, Claims
Supervisors, professional claims organizations, MIS people and industry leaders must
deliver information that is easier to read and comprehend. Third party Administrators
can play a role here in the development of a national, voluntary standard document
form for claims listing. Perhaps the NCCI could consult with industry organizations to
accomplish an electronic report that not only fulfils the informational needs of the
reader but also allows for Unit Stat Report data needs to be met. This would mean one
data entry accomplishes two task, loss run generation and Unit Stat completion. That
would save time and money and simplify a process.

After reviewing loss runs for 15 years in the industry, the best loss report I have seen is
the simplest one. This carrier has a top cover sheet that has a summary on it of prior
years’ activity and sets out the general information of account such as; policy number,
value date of losses, written premium, earned premium, incurred total, paid amounts,
reserved amounts and loss ratio. The next pages are a block table with only the heading
of Employee Information which, all in the same block, contains injured worker name,
age, SSN and months on the job. The next large block is titled Claim Information and
contains claim, number of days to report (Lag time) type of claim, Medical Only or Lost
Time and status, open or closed. The next block provides sufficient room for an adjuster
to write out what happened in more detail than just 2-3 words such as hurt back from

The report states, as the employee went to lift a 57# bag of rice the worker felt a sharp
pain on the right side. Employee works in the shipping department. The beauty is in the
simplicity. This report is of high value as it delivers more information to the end user.
In communications it’s important to put the message in the context of the person you
are trying to communicate with. As an extreme example, if we were communicating
with a deaf person we would use sign language. I think most Loss Control Engineers,
agents, consultants and employers are analytical people who would prefer a simple,
standard, easy-to-read documents. We all want our employer-customer to read and take
corrective action on loss runs. Think about when an employer changes carriers—they
have to re-orient themselves to a new set of loss run style and they may invite
apprehension about giving the report the due diligence it deserves.

However, if an employer got the same information presented in the same format between carriers s/he
could readily isolate problem areas with a quick read of the document. Employers
would become familiar with where to seek answers from the document. That may invite
more dialogue, conversations and questions about the adjudication of the claim. These conversations would lead to understanding and progress. Yes, I am stating that a easy- to-read, standard loss runs would improve closure rates as employers become acclimated with crucial details.

Another opportunity for improvement in the presentation of loss runs to all concerned
parties is to give information that can lead to corrective action. In my opinion, one big
problem with loss runs is the fact that it ONLY gives information about what has
happened on the worksite. It is a reactionary document. I believe a better approach
would be to give the prevention technique on a separate sheet so the employer can
make corrective action. For example, if eye injuries were coded with a number such as
eye001. Let’s assume an employer has several eye injuries listed on the loss report.

With computer technology, this loss sources can be identified, via the eye001 code, and
automatically, yes, automatically a document tilted “How to prevent eye injuries” is
attached to the loss report. If possible, the OSHA standard on PPE, which cover eye
protection, rides with the loss report. Why not a website address where employers
and/or safety managers can go get such prevention information. The point is that it is
not enough to list the problems, i.e. the claims, but to give the corrective control
technique would go further in reducing loss frequency.

The ability of a person to readily contact needed personnel is another opportunity for
improvement. If it were standard practice to have contact numbers on loss runs a higher level of prompt communication would be the result. The Adjusters phone, fax and e-mail would allow questions and statements about claims to be transmitted. The same is true with the need for the Loss Control person and Case Managers’ contact information. If it were readily available it would invite communication which leads to expeditious claim closures and/or lower reserves.


Suffice to say, the designers of loss runs have an opportunity at hand to improve the
intended communication of the information, save precious time
for the readers of loss runs and provide a proactive element to a reactive document.
Also, as part of the standardization, contact information of claim handlers and
prevention personnel should be on the loss run to facilitate prompt communications.
Professional Claims Associations should consider taking a leadership role in the
transformation to a national standard loss report document. The benefits will be
meaningful and widespread.